Parents are suddenly saying ‘no’ and their kids are saying, ‘What do you mean?’

Indulged. Entitled. Those labels have become hot-glued to middle-class and affluent teenagers born after the last major economic downturn, in the late 1980s. They were raised in comparatively flush times by parents who believed that keeping children happy, stimulated and successful, no matter the cost, was an unassailable virtue. A 2007 study found that nearly 75% of parents caved in to their children’s nagging for new video games, half within two weeks.

The annual discretionary spending by teenagers, whose money comes from allowance, gifts and part-time jobs, had dropped 27% to $2,600, from its spring 2006 peak of $3,560. Panicked, stressed parents are struggling to explain and impose restraints, just when teenagers are expecting more spending money, not less. Many adolescents respond with anger at what they see as a bait-and-switch world, fear for their families and confusion about budgeting.

American teenagers, many of whom have weak quantitative skills, are generally naïve about finance. Meanwhile many had debit and credit cards, some were hard pressed to explain the difference. Regardless of family means, most did not have after-school jobs.

Parents hardly relish these conversations. As they sit down with their teenagers, they are agonizing over their own feelings of failure. “Parents are going to feel they’re not giving their kids everything,” said Madeline Levine, a California psychologist. “The kids are going to be confused. They’ve never known not having what they want. And the parents are going to have to tolerate their kids’ anger.”

In familial relationships, money can be a proxy for love and trust. When money has to be limited, underlying tensions become exacerbated. For some families, the financial crisis has been a rallying point, compelling them to articulate values and priorities for the first time. Market researchers say that teenagers are, out of necessity, adjusting. Last week’s survey showed that the amount teenagers allocated for clothes had increased 1%, but that they were patronizing stores with lower-priced labels.

Anecdotes like these prompt economists and therapists to find something positive in all the economic turbulence. The sooner we have these conversations in the family and as a society, the sooner we can focus on core values, and have a more realistic dialogue about the meaning of happiness and money.

Economic inequality is growing in the world’s richest countries, particularly in the United States, jeopardizing the American Dream of social mobility just as the world tilts toward recession, states a 30-nation report. The gap between rich and poor has widened over the last 20 years in nearly all the countries studied, even as trade and technological advances have spurred rapid growth in their economies.

With job losses and home foreclosures skyrocketing and many of these countries now facing recession, policy makers must act quickly to prevent a surge in populist and protectionist sentiment as was seen following the Great Depression. The United States has the highest inequality and poverty rates in the OECD after Mexico and Turkey, and the gap has increased rapidly since 2000

Rising inequality threatens social mobility — children doing better than their parents, the poor improving their lot through hard work — which is lower in countries like the U.S., Great Britain and Italy, where inequality is high, than countries with less inequality such as Denmark, Sweden and Australia.

In the United States, the richest 10 percent earn an average of $93,000 — the highest level in the OECD. The poorest 10% earn an average of $5,800 — about 20% lower than the OECD average. Some Americans make only $5,800 a year?! Who are these people?

If your household income is $250,000, other people might consider you rich–even if it feels as if you’re just getting by.

Whatever the number, focusing on income alone overlooks many factors that affect whether people feel rich or not. Where you live is obviously one of them, since $250,000 buys a lot more in Milwaukee than it does in Manhattan. And as any parent knows, household income tends to evaporate when the bills for diapers, daycare, braces, and college come due.

So Yahoo Finance crunched some numbers to figure out what it takes to be rich in 40 cities across America–for a typical couple with no kids, and for a family of four. The average U.S. household is home to 2.54 people, so factoring in the actual size of your household produces a more realistic estimate of how much income it takes to live like the wealthiest 5% of Americans. For a family of four, nationwide, that’s $490,000.

By the same measure, here’s the household income required to be “rich” in the five most and least expensive cities in our sample:

New York. Couple without kids: $359,494; Family of four: $718,989

San Francisco. Couple without kids: $359,061; Family of four: $718,123

San Jose, Calif. Couple without kids: $354,513; Family of four: $709,025

Washington. Couple without kids: $347,917; Family of four: $695,833

Boston. Couple without kids: $316,613; Family of four: $633,227

U.S. average. Couple without kids: $245,218; Family of four: $490,436

Colorado Springs, Colo. Couple without kids: $207,472; Family of four: $414,943

Omaha. Couple without kids: $207,019; Family of four: $414,038

Fresno, Calif. Couple without kids: $205,349; Family of four: $410,698

Albuquerque, N.M. Couple without kids: $193,483; Family of four: $386,965

El Paso, Texas. Couple without kids: $175,161; Family of four: $350,321

To view the entire list.

Workers in their 20s and 30s using their retirement funds to pay credit card debt and home mortgages instead of leaving it alone to accumulate. Fidelity Investments released a survey that said large numbers of young workers cash out their 401(k) accounts when they switch jobs, leaving them without an accumulation of cash for retirement.

The typical Gen X or Gen Y will work for seven different employers across their career. If you consider the combination of the withdrawal behavior with that propensity for multiple employers, we are facing a savings challenge and crisis with this generation.”

About 74% of generation Y workers, born between 1976 and 1987, said money worried them most. Half of the workers in the two age groups said saving for retirement is an obligation or a goal but 51% said other financial priorities prevent them from setting aside money. Mortgage payments and managing credit card debt ranked higher in importance than retirement saving.

The key to changing the behavior is to get younger workers to seek advice when they change jobs so they understand they can leave the money with the employer, roll it over to the new employer’s plan or put the money in an IRA.

The U.S. Bureau of Labor Statistics says Generation X and Generation Y workers will surpass baby boomers as the largest single segment of workers in the United States by 2010 when they will represent 60% of the U.S. work force.

If fuel is warm when it’s delivered to a station, it’ll still be warm when it’s sold a few hours later.

Some people say it’s better to buy your gasoline first thing in the morning, rather than in the heat of the day. That’s because gasoline, like all liquids, expands when heated. The basic facts are correct, but the advice is not. Gasoline does expand and contract a little depending on its temperature. When gasoline rises from 60 to 75 degrees F, for instance, it increases in volume by 1% while the energy content remains the same.

Filling stations typically store their gasoline in underground tanks, where the temperature variation during the day is much less than in the air above. The result is that the temperature of the gasoline coming out of the fuel nozzle varies very little, if at all, during any 24-hour stretch at any particular station.

A 15-degree difference, for example, would result in a one-percent gain in volume. Or, just a few cents difference on the first gallons pumped — not enough to change your schedule or routine in chasing costs, especially if it might increase your fuel consumption in the pursuit.

Do Your Own Math!

Car salesmen are masters at leading people down the wrong financial road with misleading numbers. Whether buying a car or a tank of gas, it is easy to be distracted by the numbers in large lettering on the signs. But always think about the difference between the total amount of money in your pocket before and after the transaction. That sounds obvious, but consider these common examples where numbers send the consumer off in the wrong direction.

Buying A Car: Dealers have found 0% financing offers to be one of their best marketing tools. The idea is to distract buyers from looking at used cars by making it appear that they will save money financing a new car. But if you look at the fine print, almost all 0% financing offers are in lieu of a rebate.

Auto manufacturers have created other complicated offers in place of rebates to distract buyers. Before you agree to exchange your rebate for gas you will need to do an extensive mathematical analysis of your driving habits, gas buying, and most importantly all the complicated rules and restrictions attached to the offer.

Buying Gas: If you focus only on the numbers shown on the signs you might pay more. Before you set off on a trip to the station with the lowest price, think about the total cost.

Let’s do the math. If you drive 5 miles out of the way to purchase gas in a car that gets 20 miles per gallon, that 10-mile round trip will burn 0.5 gallons. If you drive that distance to pay $3.95 per gallon to fill a 15-gallon tank, instead of paying $4.00 at your local station, you only save 75 cents. But your trip to save $0.75 will cost nearly $2.

Extended Warranties: The reason for pushing service contracts is that the money spent on them is pure profit for the dealer. Extended warranties on cars typically have deductibles and exclude many parts — usually the parts most likely to fail.

Despite what the salesperson says, if you do the math you will usually find that cash is your best bet.

Recession has always been a factor raising divorce rates

University of Chicago Business School economist Gary Becker conducted a study on couples that experience any sudden significant and unexpected change in income (positive or negative) are at risk of divorce.

Jane Fahey, a financial and retirement planner in Michigan, where unemployment is highest in the country, reports that some of her middle-aged clients, both men and women, have had to move back in with their parents. A couple’s house is usually the biggest marital asset, and the lousy real estate market and soft economy are complicating the matter of dividing it equitably in a divorce.

In New York City, where Wall Street has been overrun by layoffs, divorces have also been affected, albeit somewhat differently. Lifestyle that’s been built up in over a decade is literally, within the span of one week, getting wiped out. One couple, for instance, that was preparing its divorce last summer based on $15 million in income, had to readjust the figures to under $1 million. Second homes in the Hamptons are being sold at lower selling prices, and broken up families are having to adjust to living in smaller apartments.

Perhaps it’s cheaper to seek counseling and give it another go.

Ask and You Shall Receive 

Play It Cool
Step one: Don’t walk into the situation looking for a fight. The key thing is to approach the salesperson at any store in a friendly, cooperative, congenial manner with a low-key pose of calculated incompetence.
If you show up dressed for success, they get defensive. In negotiation, dumb is better than smart, and inarticulate is better than articulate. Act a little slow, make them feel superior to give them a sense of control. Say, ‘I don’t know, I don’t understand’ and they will help you with the transaction. The longer you linger with a salesperson, he adds, the more invested he or she is in closing the sale — and the greater the motivation to give you a deal.

Being Nice Pays Off
Step two: Negotiate with the decision-maker. Always ask for the manager when you get a no.

Childlike Clarity
People who are uncomfortable going up the chain of command should take a lesson from kids. Children are wonderful negotiators; they are people without authority and power and yet they get what they want. Kids are persistent, they wear you down. If an adult does those things they would also be very successful. Step three: Be crystal clear on the result you want when the deal is done. Nothing is more important than walking in with a goal and a limit, and stating it clearly.

Eager to Bargain
Always ask, ‘Can you do better? Did you just have a sale, or are you having a sale in the future? Department stores always have coupons around, but if you don’t ask they don’t tell you about it.

It’s a Game
Step four: Know what your time is worth. Save your firepower for big-ticket items like automobiles and furniture.

Add an extra zero to the ranks of the millionaires club.

The number of people around the world with at least $1 million in assets passed 10 million for the first time last year. The combined wealth of the globe’s millionaires grew to nearly $41 trillion last year, an increase of 9% from a year before.

The ranks of the wealthy are growing fastest in the developing economies of India, China and Brazil. The number of millionaires in India grew by about 23%. The United States still reigns supreme when it comes to fat wallets, though: One in every three millionaires in the world lives in America. Combined, Africa, the Middle East and Latin America account for just one in 10.

$1 million isn’t what it used to be. One million dollars in 1996, the first year the report was issued, would have been worth about $1.3 million last year. The wealth of the world’s richest is projected to reach almost $60 trillion by 2012.

From Auto Leasing to Life Insurance to telephone service, the gov’t sums it all up for us. Thanks, gov’t.

Airfares
1. Compare low-cost carriers with major carriers that fly to your destination. Remember, the best fares may not be out of the airport closest to you.

2. You may save by including a Saturday evening stay-over or by purchasing the ticket at least 14 days in advance. Ask which days of the week and times of the day have the lowest fare.

3. Even if you are using a travel agent, check airline and Internet travel sites, and look for special deals. If you call, always ask for the lowest fare to your destination.

Car rental
4. Since car rental rates can vary greatly, compare total price (including taxes and surcharge) and take advantage of any special offers and membership discounts.

5. Rental car companies offer various insurance and waiver options. Check with your automobile insurance agent and credit card company in advance to avoid duplicating any coverage you may already have.

New cars
6. You can save thousands of dollars over the lifetime of a car by selecting a model that combines a low purchase price with low depreciation, financing, insurance, gasoline, maintenance and repair costs. Ask your local librarian for new car guides that contain this information.

For the next 60 tips.

Do You Hide Purchases From Your Loved One?

Half of the pairs in a 2003 study came up with completely different figures when asked to estimate their family’s income and net worth. In a survey last year of couples ages 43 to 70, some 35% were more than two years off when guessing when their spouse planned to retire.

About a third of those surveyed admitted to lying to their partner about money. And four out of five respondents in another poll revealed that they hide purchases from the one they love. Couples these days marry later than they used to and come into the union with their own credit cards, bank accounts and investments, which often stay separate. And if you’re convinced that sharing what you’ve spent or saved will spark criticism or a fight, it’s understandable you might choose to keep a few details to yourself.

You can’t come to smart decisions - or even joint decisions - if you don’t know what assets and liabilities you’re working with and what your partner’s goals and priorities are. In other words, two heads really are better than one for solving financial problems. The blinders-on approach also makes a crisis more difficult to handle. Should your spouse pass away, you’ll be left scrambling to find bank accounts and insurance policies. Here are some mandatory topics to discuss with your spouse.

Instead of going into retirement loaded with assets, Americans are hitting their retirement years loaded with debt. 

Swamped by debt and rising medical bills, elderly Americans have been seeking bankruptcy-court protection at sharply faster rates than other adults. From 1991 to 2007, the rate of personal bankruptcy filings among those ages 65 or older jumped by 150%, according to AARP. Experts say medical bills have played a major role in the debt that has forced many elderly Americans into bankruptcy proceedings.

Although people believe that having money leads to happiness, new research suggests they are happier if at least some of the money is given to others.

Can money buy you happiness? Yes—so long as you spend the money on someone else. According to new research, giving other people even as little as $5 can lead to increased well-being for the giver. That’s the insight into the secret of happiness by HBS professor Michael Norton and two colleagues from the University of British Columbia, Elizabeth Dunn and Lara Aknin. “Supporting this premise, our work demonstrates that how people choose to spend their money is at least as important as how much money they make,” the researchers explain.

“One of the most puzzling paradoxes in social science is that though people spend so much of their time trying to make more money, having more money doesn’t seem to make them that much happier. We conducted a number of studies—from national surveys to a field study in which we showed that money can buy happiness, when people spend that money prosocially on others (giving gifts to friends, donating to charities) rather than on themselves (buying flat-screen televisions).”

In May, the thrifty Honda Civic became the best-selling vehicle in America.

The Honda Civic became the best selling vehicle in America - car or truck - and both it and the Honda Accord outsold the once-invincible Ford F-150 pickup trucks.

Among the world’s automakers, Honda has long behaved as if the world is indeed running out of all kinds of resources, including oil. Its relentless focus on thrift and conservation, which seemed like eccentricities 20 or 30 years ago, today make Honda the leader of the environmental pack.

While the Detroit Three plus Toyota were getting hammered on the showroom floor in May, with sales down anywhere from 4.3% for Toyota to 27.5% for General Motors, Honda posed a stunning 15.6% sales increase.

Rocket science this isn’t. They aren’t making any more oil so, over time, you had to figure it was going to get more expensive and more scarce. So why weren’t other manufacturers able to see the road ahead as well as Honda?

1. They got sidetracked by the easy profits available in big SUVs and pickups. During the 1990s, the last golden age of the American auto industry, the combination of cheap gas and high-profit big vehicles seduced automakers into believing the good times would never end.

2. Honda’s tightly-knit corporate culture and long time horizon made it uniquely able to wait for events to move in its direction, rather than chasing fluctuations in the marketplace.

3. The other automakers became distracted by their own corporate imperatives. Nissan compounded its problems by starting its own passenger car horsepower race. The Detroit Three, at times, seemed to get their jollies by reviving models from 40 years ago — Mustang, Challenger, Camaro — because of the short term jolt they got in the marketplace, rather than formulating any kind of long-term strategy for a resource-constrained world.

Teach Your Children Financial Lessons As Young As Possible

There are plenty of resources on the internet that’ll teach you how to educate your child about finance. So hop to it.