How teen workers spend their money: U-M study shows trends

February 4, 2014

Teens shopping for clothes. Photo by Thinkstock.

Photo by Thinkstock

ANN ARBOR—High school seniors spend most of their earnings on clothes, music, movies, eating out and other personal expenses.  Spending on cars and car expenses comes in second, especially for males. And way down the list come saving for college or other long-range goals and helping with family living expenses.

The findings are from a new study of 49,000 high school seniors from the classes of 1981 through 2011, based on the Monitoring the Future study conducted annually by the University of Michigan Institute for Social Research. View and download the data chart (Excel file).

The full report, titled What do teenagers do with their earnings, and does it matter for their academic achievement and development? is available at (PDF file). Authors are Jerald Bachman, Jeremy Staff, Patrick O’Malley and Peter Freedman-Doan.

Teen Spending Chart

Chart: Percentages of high school seniors who spend/save about half or more of earnings for various purposes, by gender, for class years 1981-2011. Click image for larger view.

“By the time they reach the end of high school, most students are also paid employees, working part-time jobs during the school year,” says Bachman. “Why do teenagers work? For the money, stupid! At least that is what many economists would say – not to mention the teenagers themselves! There may be other advantages to working; decades ago, some argued that getting into the ‘real world’ of work could provide lots of other valuable experiences besides learning how to earn – and spend! – a paycheck.  More recently, social scientists have uncovered a darker side of student employment, finding that working more than 15 to 20 hours a week is linked to decreased academic achievement and increased substance use.” In recent years, the proportions of high school seniors in paid employment have declined appreciably, from 75% in 2001 to 59% in 2010.  But there has been little change over the years in what student workers actually do with their money.  Most students devote about half or more of their earnings to “discretionary” spending on relatively short-term wants and needs.

Levels of spending on cars have changed notably, however.  Up through about 2005 roughly 30 percent of males spent about half or more of their earnings on cars, but that dropped to about 23 percent for males in the classes of 2009-11. Among females the proportions spending about half or more of earnings on cars was consistently lower, but rates rose gradually from 1981-85 (16 percent) through 1995-2000 (24 percent) and then dropped sharply by 2009-2011 (17 percent).


Wording of Questionnaire Items on Use of Earnings from Paid Work (5 items all with the same question stem and response categories):

Please think about all the money you earned during the past year, including last summer. About how much of your past year’s earnings have gone to:

  1. Savings for your future education
  2. Savings or payments for a car or car expenses
  3. Other savings for long-range purposes
  4. Spending on your own needs and activities — things such as clothing, stereo, TV, tapes and discs, other possessions, movies, eating out, other recreation, hobbies, gifts for others, and other personal expenses
  5. Helping to pay family living expenses (groceries, housing, etc.)

Response scale:

  1. None
  2. A little (1-20%)
  3. Some (21-40%)
  4. About half (41-60%)
  5. Most (61-80%)
  6. Almost all (81-99%)
  7. All

“About half or more” equals categories 4, 5 , 6, and 7, combined.


“Although our own research did not explore why this change in car spending has happened,” says Bachman, “other reports have shown overall declines in driving in recent years, and also that young people in particular are driving less. It may well be that young people are spending relatively more on electronics and are interacting with friends virtually rather than driving to see each other. Tightened requirements for drivers’ licenses in most states have probably contributed, as well as higher costs for insurance and fuel. Also, drivers’ education classes, which used to be offered in nearly all high schools, are now available in only about one in five schools due to funding cut-backs. Finally, it appears that young people are more likely to be chauffeured around these days and just don’t need or want their own car as much as they used to.”
Another interesting change in teen spending was the small but steady decline in proportions of female 12th graders who devoted about half or more of their earnings to discretionary spending, dropping from about 62 percent in 1981-1985 to about 55 percent in 2006-2011. Among males the proportions were consistently lower, but they too dropped slightly from a high of about 55 percent in 1986-2000 to about 51 percent in 2009-2011.

Proportions of 12th graders who contributed about half or more of their earnings to helping out the family were consistently low, rising slightly over the three decades studied from 9 to 12 percent among males and 10 to 14 percent among females.

Savings for further education ranked a bit higher than contributions to family, but showed little in the way of gender differences or consistent change across time, averaging about 17 percent who devoted about half or more of their earnings to future education.

An important question examined in the report is whether saving for college somehow “protects” students from the possible negative consequences of working long hours on the job. The researchers found, first of all, that the college savers were somewhat less likely to work long hours in a paid job, presumably because they wanted more time for school work so as to qualify for college entrance. The researchers also found that, for any given level of work intensity, the college savers were less likely to use cigarettes, alcohol and illegal drugs,  and more likely to have good grades. Nevertheless, among both those who saved about half or more for college and those who did not, working long hours was associated with negative outcomes.

So are the college savers “better off” than their classmates, and does saving for college somehow insulate them from bad consequences of working long hours? “The answers are yes and no,” says Bachman. “Yes, the college savers have consistently higher grades and college aspirations, and lower use of drugs: but no, they are still as potentially susceptible to negative effects of working long hours.” Accordingly, the report concludes with this advice: “Students who plan to save most of their earnings for college should be commended, but should still be encouraged to avoid spending long hours in employment during the school year.”

What about those possible advantages of getting “real world” job experience? Bachman points out that most researchers now seem to agree that many student work experiences fall far short of the ideals originally imagined. Nevertheless, he thinks that even in a job flipping burgers, students can make good use of their employment experiences by developing a set of skills and, importantly, references, “I’d suggest this to any student entering a part-time job during the school year, or for that matter a summer job: Talk to your supervisor right at the start to say that you aim to earn a positive written recommendation as an employee. That will make both you and your supervisor see this job as much more than just a way to earn spending money; rather, it is a chance to learn some skills (including “people skills”) and also build an important credential that can serve you well into the future.”


Contact:  [email protected]

By Diane Swanbrow

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