Use prom to teach teens to budget

MADISON, Wis. (3/19/08)--Spring prom is a rite of passage with lifelong memories for teenagers who participate. But if you're not careful, that memory's price tag could cost a wallet--or a suitcase--full of money, says the Credit Union National Association's Center for Personal Finance.

Researchers at North Dakota State University Extension estimated last year that the total spent on prom-related items in the U.S. was $4 billion (NDSU Magazine Spring 2007).

Debra Pankow, assistant professor of child development and family science at North Dakota State University, has studied the social and economic impact of proms for the past seven years. She suggests prom as an opportunity for parents to introduce a budgeting lesson for their children, making it a memorable experience while ensuring that a large credit card bill doesn't become a prom souvenir.

The first step is to decide--with your child--on a spending plan. Determine how much you will contribute and what your teenager is expected to pay for each item, including easily overlooked expenses like accessories and photographs. Pankow says parents can help their teenagers have a memorable night without overspending, which is a valuable lesson for their future.

These strategies can help save money on prom expenses:

Carpool with other couples and split the cost of gasoline.

Borrow a dress or tux, rent one from a formalwear store, or buy from a consignment or thrift shop.

Do your own hair and makeup or visit a local cosmetology school instead of an expensive salon.
Use accessories you already have or borrow from a friend.

Hold a dinner party or barbeque instead of dining out.

Ask a friend or relative to take pictures rather than paying for a portrait at the dance.

For more information, read "Planning for the Prom" in Googolplex.

courtesy of cuna.org