2010-2011 Timeframe:

 

Spending Benjamins was a favorite activity for designer-jeaned teens just a few years ago.  But the severe economic downturn changed things so much that their mantra might well be “a penny saved is a penny earned.” Some marketers are dispensing with XYZ-tagging and simply calling the young survivors of the financial debacle The Recession Generation.

The teenagers, who found themselves on shaky ground at a delicate age, have responded by toughening up on financial matters: Spending less, saving a bigger portion of their earnings and showing a high level of interest in learning how to manage their money. In a Charles Schwab survey of 1,000 teens aged 16-to-18 years old, an overwhelming number said they were Super Savers and not Super Spenders.

“It seems clear that the great recession has changed the mindset of teens,” Carrie Schwab-Pomerantz, senior vice president of Schwab Community Services. In the Post-Financial Crisis era, a large percentage (73 percent) say it is important to squirrel away cash for emergency needs. They rank college as the No. 1 reason for saving.

Grateful for what they’ve got

The Recession Generation really is way different from teens of 2007, when Schwab’s last adolescent survey said kids were piling on credit card debt at an unprecedented rate to buy clothes and pay for entertainment.

The new Super Saver thrift is not just a lot of talk, either.  On average, this year’s group has put aside $1,000 in savings.  The total is slightly less than the $1,044 in the prior survey – but then again there are fewer jobs for under-30s and even less for under-18s.  Average weekly spending by teens has dipped noticeably, the survey said.

The recession has been tough on them, of course, but teens have not totally missed that fact that their parents have also had a rough time as providers. Indeed, the survey says that the kids think Mom and Dad are all right.

Say what? Even if they don’t always act like it, a startling 64 percent say they are grateful for what they have been given. Not only that, but Schwab’s Independent Advisor Research found most of them (58 percent) were unlikely to ask parents for more.  Not that they were total ingrates before, but fully 39 percent say their appreciation of their parents’ financial straits has grown.

Of course they are hearing more about it from Mom and Dad.  Money is no longer a taboo topic at the dinner table and three-quarters of parents have given the kids the lowdown on the family’s finances over the past year. Parents, like the kids surveyed by Schwab, saved with a vengeance when the recession gripped, as job losses and financial setbacks spurred caution.

More recently, though, the adult population has starting spend to again in the recovery. For their children the impact of the recession may last longer. History shows the downturn can mark those coming of age even after the rebound.  Graduates who enter the workforce in a downturn tend to underperform those joining it in boom times.

Hungry for Financial Literacy

The sub-eighteen set, though, have big plans to go to college and out-earn their parents (59 percent expect to do so.) They say they want to enhance their money IQs in a way their parents never did, with 86 percent saying they would welcome classroom sessions on money management.

If the young Super Savers stick to their prudent path of savings and managing money over the long haul, their recession lessons may turn big dividends. By starting early they can enjoy the miracle of compounding interest, which no less a math whiz than Einstein called  “The greatest mathematical discovery of all time,” or so says GenXFinance in an article explaining the Rule of 72.  Super Savers will love this rule that calculates how savings pile up when interest compounds. By dividing the percentage number into 72, you find how long it takes for your savings to double at a given interest rate.  (EG, at six percent it takes 12 years because 72 divided by six equals 12)

It’s the kind of calculus that Franklin loved to promote, though our inventor of the Founding Fathers did not really coin the term ‘A penny saved is a penny earned’ as so many people think.  It’s merely a version of an age-old English phrase that said, ‘A penny saved is twice got.”

Yankees brought thrift to the New World as a kind of secular religion.  Franklin, himself a self-made product of the era, did coin the phrase “Time is money.”

If the sixteen-to-eighteens embrace that adage they could be years ahead of the game.

RJ Safra is a New York-based writer who specializes in finance and business topics.

Some would argue that the recession started well before December 2007 — and many would argue that it’s hardly ended yet. Indeed, if you look at unemployment and the housing market, you’d hardly think we are doing much better today than we were during the recession’s strongest grip. So we decided to take a look at the major events of the past three years. For the highlights, see our infographic — the Recession Timeline Diorama.

For more personal finance visualizations see byJess.net.

Embed the above image on your site

<p><a href=”http://www.mint.com/blog/trends/the-recession-timeline-diorama-2007-2010″ mce_href=”http://www.mint.com/blog/trends/the-recession-timeline-diorama-2007-2010″><img class=”alignnone size-full wp-image-12783″ title=”Recession Diorama” src=”http://www.mint.com/blog/wp-content/uploads/2010/11/diorama.jpg” mce_src=”http://www.mint.com/blog/wp-content/uploads/2010/11/diorama.jpg”/></a></p> <p><a href=”http://www.mint.com/” mce_href=”http://www.mint.com/”><a href="http://www.mint.com/">Personal Finance Software</a></a> – Mint.com

Earlier this year, the National Bureau of Economic Research delivered a piece of news that came as a surprise to most Americans: the recession, it determined, had officially ended in June 2009. At a total of 18 months, it now has dubious honor of being the longest U.S. recession since the Great Depression.

But how do Americans feel about it? Do the millions unemployed individuals feel like it really is over? And how do people – employed and unemployed – feel about its aftermath? We compiled the answers those questions, and more, in our latest infographic.

(iluvcocacola)

The recession, now officially over and down in history books the longest since the Great Depression, was not kind to the business world. Once-proud General Motors succumbed to government takeover. Disgraced financial giant AIG (AIG) needed taxpayer bailouts to survive. Countless smaller, uncelebrated businesses closed their doors completely.

An exception to all of this economic despair has been fast food chain McDonald’s (MCD). While rivals Burger King (BKC) and Yum! Brands (YUM) struggled during the recession, McDonald’s has not only stayed afloat since 2008: it has grown.

In August, McDonald’s reported that sales at stores open at least 13 months rose 4.6%. Burger King, meanwhile, announced on September 2 that it has agreed to sell itself to investment firm 3G Capital in order to “gain breathing room to fix its business,” according to Reuters. At that time, Burger King shares were down more than 31% since the end of 2008 – while McDonald’s shares rose nearly 18% during the same period.

Here’s how McDonald’s did what so many other businesses coundn’t during the recession: thrive.

Recession-Friendly Pricing

As early as November 2008, Forbes recognized McDonald’s low pricing strategy as a pillar of its recession-era success. At that time, Burger King’s stock had fallen 24.6% over the prior year, while Yum! Brands had plummeted 28.6% during the same period. Ruby Tuesday (RT) went into a free fall, with its stock falling 88.3% at that time. McDonald’s, meanwhile, dropped only 3.4% during this time frame. The reason, Forbes maintains, was its “recession-friendly Dollar Menu.”

In addition to that, McDonald’s occupies in the food service industry roughly the position that Wal-Mart fills in retail: the lowest-cost producer. When recession strikes, cost becomes paramount.

New Products For Different Markets

(andinarvaez)

CNN, while acknowledging the cost issue, says that there is more to why McDonald’s has thrived. Referring to the company’s “liquid profits,” CNN finds that McDonald’s has “given more kinds of people more reasons to head to its stores throughout the day, buying an ever-wider range of products.” Throughout its history, McDonald’s has been a place for young people to quickly get their hands on cheap, greasy food and leave as fast possible.

Today, McDonald’s has grown far beyond these needs. For one thing, the fast food chain now sells premium coffee which, Consumer Reports says, beats Starbucks for taste and quality. A new line of now-popular frappes and fruit smoothies was released. Most McDonald’s locations also offer free wifi Internet access, with the goal to not only bring in more customers through the doors, but once in, get them to stay longer (and consume more) as well.

Reduced Advertising Costs

(Fuzzy Gerdes)

McDonald’s has also shrewdly taken advantage of lower TV advertising rates to reinforce its unique selling proposition to customers. As CNN explained in August, rates for local television advertising are down across the board due to lower promotional spending across the business-to-consumer world.McDonalds, whose same-store sales rose 7% internationally in July versus a year ago (and 10.1% in “non-American, non-European parts of the world) has seized the opportunity to mount an all-out promotional blitz for its various products without having to substantially grow its advertising spend.

Improved Operations

(sfxeric)

Another driving force behind McDonald’s success in the last few years has been a company-wide push for improved operations. In a March 2009 article, the Wall Street Journal told readers about Ralph Alvarez, the Cuban-born ex-accountant who served as McDonald’s president and chief operating officer through the end of the year and spearheaded a full-fledged crusade to make McDonald’s more efficient. (Alvarez announced his retirement in December 2009, citing health reasons.) During his short-term leadership, however, his work included:

“…pruning gas-guzzling cars from the company fleet, pressing media buyers to negotiate lower advertising rates and putting the brakes on building new outlets on street corners where nearby development shows signs of weakness.”

While tackling these challenges, Alvarez is managing the company’s gigantic investments in the coffee drinks and other new product lines that have helped McDonald’s stand tall against the recession. He is so committed to his efficiency campaign that he reportedly visits stores unannounced wearing baseball caps and sunglasses to verify first-hand that his instructions are being followed.

Rapid Price Adjustments

(Ben Garney)

The same Wall Street Journal piece also discusses how McDonald’s has begun using computer systems for in-store decision making. Using the “reams of customer data” at its disposal, McDonald’s now closely analyzes “everything from whether customers are trading down to smaller value meals or dropping cokes from their orders to exactly how much they’re willing to pay for a Big Mac.” Alvarez, who confessed to loving numbers, said that these kinds of computerized systems allow McDonald’s restaurants to rapidly adjust prices based on current customer demand.

One result of this process occurred in China, where some restaurants reportedly slashed the price of certain combo meals by up to one-third – but only during lunch hours.

Embed the above image on your site
<a href=”http://www.mint.com/blog/wp-content/uploads/2010/04/MNT-SAVINGS-R7-1.png” mce_href=”http://www.mint.com/blog/wp-content/uploads/2010/04/MNT-SAVINGS-R7-1.png”><img src=”http://www.mint.com/blog/wp-content/uploads/2010/04/MNT-SAVINGS-R7-1.png” mce_src=”http://www.mint.com/blog/wp-content/uploads/2010/04/MNT-SAVINGS-R7-1.png” alt=”" title=”MNT-SAVINGS-R7-1″ width=”900″ height=”998″ class=”alignnone size-full wp-image-10390″ /></a><br /><a href=”http://www.mint.com/” mce_href=”http://www.mint.com/free-online-financial-calculator/”><a href="http://www.mint.com/free-online-financial-calculators/">Budget Calculator</a></a> Mint.com

The government is telling us that the economic stimulus is working and the recession is over. But you wouldn’t know it from looking at the unemployment numbers. While we may have dodged another great depression, unemployment is at its worst since then, having fallen to 10 percent by the Fed’s own reckoning. And, while we don’t like to be the bearers of bad news, we do stand for transparency in reporting statistics. So we’ve produced an animated infographic explaining who gets to call themselves ‘officially’ unemployed, and why the government leaves out millions of jobless Americans in their often cited and repeated unemployment rate statistic. So while the economy may be recovering, it might be awhile before many Americans feel it in their wallets.

Embed the above video on your site
<object width="600" height="360"><param name="movie" value="http://www.youtube.com/v/Ulu3SCAmeBA&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/Ulu3SCAmeBA&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="600" height="360"></embed></object><br /><a href="http://www.mint.com/">Free budget software</a> – Mint.com

Embed the above image on your site
<a href="http://www.mint.com/blog/wp-content/uploads/2009/12/UnemploymentGameShow-1.jpg"><img src="http://www.mint.com/blog/wp-content/uploads/2009/12/UnemploymentGameShow-1.jpg" alt="UnemploymentGameShow" title="UnemploymentGameShow" width="1000" height="1298" class="alignnone size-full wp-image-7377" /></a><br /><a href="http://www.mint.com/">Free budget software</a> – Mint.com

The US stock market is soaring, commodity prices are on the rise, and there are signs that consumer confidence is growing. Ask the US government if the recession is ending and you’ll hear a resounding yes as the Obama administration rushes to claim an early victory. Naysayers however point to the massive US debt and the 10% unemployment rate as signs that, even with the economic stimulus package, we still have a long way to go. Our info-graphic displays some leading economic indicators on the road to recovery.

Embed the above image on your site
<a href="http://www.mint.com/blog/wp-content/uploads/2009/10/economy-2.jpg"><img src="http://www.mint.com/blog/wp-content/uploads/2009/10/economy-2.jpg" alt="economy-2" title="economy-2" width="1528" height="1061" class="alignnone size-full wp-image-6900" /></a><br />Mint.com <a href="http://www.mint.com/">Personal Finance Software</a>

Cyber Bartering

chika

Cyber-bartering is not a new phenomenon, but bartering-specific sites are more popular today than ever. More specialized sites such as Barterbee, Barterquest and Rehashclothes, offer individuals various avenues for bartering, specific to what good or service they are looking for. And then there is Craigslist.org: this site is not a bartering site per se, but its worldwide reach and myriad categories offer individuals the ability to trade anything with anyone, anywhere in the world. Want to trade a washing machine for a motorcycle? How about your old hockey gear for a new snowboard? Check out this site, and chances are, you’ll find someone who’s willing to take up your offer.

Regional Bartering Exchanges

rick

In the last several years, many regional bartering exchanges began popping up in various parts of the United States, and presumably elsewhere in the world.  These are networks of businesses that trade the value of services for that of other services. For instance, a plumber may do a $400 dollar repair job for a local brewery. But instead of trading this directly for $400 worth of beer and chicken fingers, he can take this credit and put it back in circulation by trading units of $400 for other goods and services from the various other network members.

Big Businesses Bartering

herval

While it may sound strange, many of the world’s largest companies are involved in bartering at some level. According to a recent study by Barter Business Unlimited (a large network with over 10,000 member businesses), “…more than 65 percent of the corporations listed in the New York Stock Exchange are presently using barter to reduce surplus inventory, boost sales and ensure that production facilities run at near capacity.” This can definitely help lots of businesses struggling to move inventory during this recession. CEO of Bartermania.com, Vipul Rawal claims that global business-to-business bartering is up by as much as 60% due to the current recession, and this trend is starting reach developing countries such as India and China.

Local Bartering Circles

techlah

In countries across the world, people are going back to the local marketplaces in droves. Exchanging wares and services are typically traded at such gatherings, which may set up for bartering specifically, or the bartering itself may just be a byproduct of individuals’ personal credit crunches. Anything from surfboards to electronics, to produce can typically be traded at such places. While these of course did not emerge as a reaction to the current recession, there’s no doubt that they are more popular today than ever.

Script Currencies

writerjax

Another recent development is the re-emergence of local currencies, or script currencies. One of the most famous examples of these started in 2007, in Western Massachusetts. In an effort to promote buying locally, residents of several communities are able to trade in $10 US at local banks for $11 Berkshares. There is a ten percent discount worked into the exchange rate, and the currency is widely accepted by many area merchants. As a result of the increased local commerce, businesses are willing to discount their prices, and local shoppers are happy to get the discount. It is estimated that more than $2 Million worth of Berkshares have circulated through 350 businesses since the bills were first printed two years ago. 

Replacement Currencies

shmoomeena

Replacement currencies also tend to develop when a national currency loses the trust of local economies. During Asia’s financial crises a decade ago, these developed in more remote regions, where many were dependent on remittances from relatives living in capital cities. The Santi Suk community in Northeastern Thailand is a notable example. The whole program is managed by a single monk, who operates the ‘Bank’ from his one-room office. The currency goes by the Thai word for ‘merit’, and is used alongside, or in lieu of the Thai Baht. Proponents of this currency (which are decorated by drawings made by local children) were once the subject of central government scorn, but due to today’s global financial crises, the government is allowing the money to flow freely once again, as it does not place a strain on the broader economy, nor the currency at large.

Bartering’s Legal Side

umjanedoan

While few might stop to think about the legal ramifications of bartering, it should be noted that even though it seems informal, bartering is a transaction just like any other. For those trading goods or services of a marked value, a contract ought be used to protect both parties. According to SMU Law professor, Mary Spector, every aspect of the exchange should be outlined, for example, with regards to pet care being exchanged: “Would [four hours of pet care] mean grooming the pet? Walking the pet? How many pets would be involved? Is it just dogs or would it be dogs and fish?

Tax Implications of Bartering

Matt Honan

Similar to the legal ramifications, there are also tax implications of barter-based commerce. According to the IRS, “If you conduct any direct barter – barter for another’s products or services – you will have to report the fair market value of the products or services you received on your tax return.”