The ability to evaluate long-term consequences is essential to successful financial decision making. Teens develop financial behaviors that can influence their actions as adults (Martin and Oliva 2001), such as making the strategic choice to delay gratification by saving and avoiding a debtor’s prison (Bernthal, Crockett, and Rose 2005). Teens experience stress from school, family, and finances at higher levels than their parents realize (APA 2009).
Teenagers in the United States possess significant spending power ($116 billion; Youth Pulse 2010), with increased access to cosigned or parent’s credit cards (Jumpstart.org). Teenagers also frequently visit shopping centers and are tar- gets for luxury goods (Dunleavey 2006). However, 48% of U.S. teenagers have low financial literacy (Mandell 2008), and ethnic and female teens lag further behind (Lusardi, Mitchell, and Curto 2010). This combination of access to money or credit, being presented with offers, and low financial literacy and high stress can be problematic. Under- standing which factors may improve this segment’s financial decision making could help inform the design of financial education interventions and regulatory policy and guide companies that market to teenagers to improve industry self-regulation
Family influences teenager’s buying behavior by acting as the reference group. Reference group is a term from social psychology identifying that group to which people refer or make reference in evaluating themselves (Kotler, 2008). Reference groups expose a person to new behaviors and lifestyles, influence the person’s attitude and self-concept, and create pressures to conform that may affect the person’s product and brand choice. The group influence tends to be strongest when the product is visible to others whom the buyer respects. As cited by Martin and Bush (2004) in the journal article ‘Do role models influence teenagers’ purchase intention and behavior?’, Moschis (1985) claimed that family influence on consumption patterns and attitudes often overrides any other form of influence. Besides that, teenagers tend to follow family’s perception in terms of economic and social status. The background of family a child being brought up contributed in this situation. A teenager will have a positive perception towards a product if the parents are satisfied with the product. Besides that, Hogg and Bruce (2003) cited that the family influence relates clearly to perception of brands as Hite and Hite (1994) indicated. Reflecting on child development theory it is suggested that children’s behavior is absorbed at very young ages from familial examples (Hite and Hite, 1994). Teenagers may imitate certain buying pattern of the family. For instance, they may purchase the product according to the amount and quantity the family used to make. For example buying the product in bulk, in value pack or individually. They may also follow the buying pattern of the family for example the duration and frequency in using and purchasing a product. An example will be making the purchase of daily product in weekly or monthly basis.
Family has a significant effect in teenager’s buying behavior in terms of self-concept. Self-concept is one’s own perception of own self. According to Kamaruddin (2006), self-concept is formed through the social interaction of an individual with his or her environment. As a result of the interaction with significant people, mainly the family members, the personality and self-concept are formed. The self-concept summarizes the beliefs a person holds about his own attributes and how he evaluates the self on these qualities. (Solomon, 2009) Teenager’s self-esteem is being built up by family through the process of growing up. It refers to the positivity of a person’s self-concept. Teenager tends to make purchase decision depending on their self-esteem. The most significant area will be one’s physical appearance.