MILWAUKEE (BUSINESS WIRE), October 11, 2011 - Impulse buying starts young. Spur of the moment spending – suddenly buying something they want or need - distracts more than half of all kids (53%) from saving to buy something special, according to the latest poll released by Northwestern Mutual Foundation’s financial literacy website, Themint.org.
When asked in a separate question about what helps most to stick with a savings goal, the majority of respondents (69%) agreed that it is ‘putting away a little of my allowance or paycheck each week’. The good news for parents is that they can play an active role on this front, helping kids to bridge the gap between intentions (financial goals) and behavior (financial habits).
“Almost everyone has made an impulse purchase at some time or another. But, unplanned spending that happens on a regular basis can derail long-term financial goals,” said Rebekah Barsch, Northwestern Mutual, vice president. “What this poll shows us is that our financial behaviors are starting to form early on, so they can also be addressed early on. I have two children and know that kids can really benefit from being taught how to make their own financial plans, which can include identifying a goal and having a process – such as automated savings – to help them meet it.”
Impulse buying wasn’t the only distraction to successfully saving that was uncovered by the poll. The results also showed that kids feel ‘it takes too long to save that much money’ (28%), and for some kids the distraction is ‘falling behind and feeling like I can’t catch up’ (13%).
“When it comes to learning about saving and spending, today’s new bike is tomorrow’s new car or college tuition or even retirement. Teaching kids why it’s important to avoid splurging today to build up savings for tomorrow helps them understand how to set and stick with financial plans,” said Barsch.
Impulse purchases distract girls more than boys
While impulse purchases were the biggest distraction to successful saving overall, there were some key differences between boys and girls. In fact, girls are more than twice as likely as boys (67% versus 27%) to be deterred from a long term goal by the allure of something they want or need. Boys, on the other hand, were more likely to be impatient in reaching their goal: half (51%) of the boys surveyed said they get distracted due to the fact that “it takes too long to save that much money”.
More girls than boys (84% versus 46%) prefer an automated approach to savings, saying that direct deposits from an allowance or paycheck directly into savings helps them stick with their savings goal. Boys, however, prefer to focus on watching their progress by writing down the goal, and tracking their saving and spending (44% for boys versus only 6% for girls).
According to Barsch, “Long term financial security is typically a combination of both of these practices: taking incremental steps to save, tracking and celebrating progress along the way. For starters, recognize what motivates kids, and help them build mini financial plans around their key motivators to build good financial habits for life.”
- Impulse buying starts young and spans the ages: Biggest distraction to achieving a long term savings goal is suddenly seeing something you want or need and having to get that first.
- Are we there yet?: For boys, the biggest distraction to achieving a long term savings goal is time; for girls, it’s impulse spending
- Automatic success: More girls than boys prefer direct deposits as the best way to stick with a savings goal
About Themint.org Poll
From June through September 2011, visitors to the financial literacy Web site Themint.org were invited to answer two questions about how they stick with their long-term savings goals. A combined total of more than 1,100 respondents nationwide provided insight, and the results were then analyzed based on several demographic factors including the age and gender. This poll marks the fifteenth in an ongoing series of polls by Themint.org, with the aim of bringing continued awareness to financial literacy issues. Poll results are archived on the site and can be viewed at http://www.Themint.org/polls.
Launched in 1997, Themint.org is an award-winning financial literacy website that provides fun activities, games, challenges, quizzes and tests for students and teens, helpful tips for parents, and entertaining programs and lesson plans for teachers to promote financial literacy.
About Northwestern Mutual
The mission of the Northwestern Mutual Foundation is to build strong, vibrant communities that serve as a legacy to future generations. The Foundation’s giving is designed to create an impact on the communities where the company’s employees and financial representatives live and work. In fiscal year 2011, the Foundation contributed more than $15 million to nonprofit organizations across the country.
The Northwestern Mutual Life Insurance Company – Milwaukee, Wis. (Northwestern Mutual), the “World’s Most Admired” life insurance company in 2011 according to FORTUNE® magazine, has helped clients achieve financial security for more than 150 years. As a mutual company with $1.2 trillion of life insurance protection in force, Northwestern Mutual has no shareholders. The company focuses solely and directly on its clients and seeks to deliver consistent and dependable value to them over time. Northwestern Mutual and its subsidiaries offer a holistic approach to financial security solutions including: life insurance, long-term care insurance, disability insurance, annuities, investment products, and advisory products and services. Subsidiaries include Northwestern Mutual Investment Services, LLC, broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company, limited purpose federal savings bank; and Northwestern Long Term Care Insurance Company; and Russell Investments.
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