Reality Check: A Night at the Prom

The New York Times article A Prom with all the Glitz, but Every Dollar Squeezed from April 30th got me thinking. Another example of the interesting ways that people prioritize during tough economic times. Prom is a milestone in most teenagers lives, and can be a happy memory. I went to a very small Prep School, way too small to have a Prom. We went on to live perfectly happy and successful lives having missed Prom, but I confess that I went to a public school friend's Prom. What is striking in this article, is not the desire to go to the Prom, but the things deemed necessary as part of the experience. Here are historical tidbits I borrowed from About.com:

• Prom has been around since 1811, and is derived from the late nineteenth century “promenade ball”.

• Proms are inspired by debutante balls, which are events that formally debut teenagers from prestigious families.

• In the early 1900s, Prom was just a simple tea dance for high school seniors.

• Proms thrived in the 1950s due to a post-war economic boom.
  

• Girls didn't originally purchase new clothing for proms—dress codes found on invitations simply called for “your Sunday best”.

Over the years, we've come a long way from a formal in a decorated High School Gym. The price tag has come a long way too. Back when I went to the Prom, the boy rented a Tux and bought the girl a wrist corsage, the girl bought a gown (more on this later) and a boutinierre for the boy. The boy bought the prom tickets. The big after Prom event was sleeping on the beach (I'm sure there were regionally adjusted equivalents). Today's Prom price tag includes expenditures such as hair salon, nail salon, make up artist, limo, photographer, and a trip to the beach for the weekend. How did we get here?

Forget the obvious questions like, did teenage girls suddenly become incapable of doing their own hair, nails, and make up (or each other's)? Forget that the limo thing probably originated as a way of ensuring that kids weren't driving around drunk on Prom night. So, here's what I think happened. Kids who grew up watching the red carpet on TV started emulating it. Businesses were all too happy to market to this crowd (can't blame them, business is business). Most important though were parents willing to pull out their credit cards and foot the bill, or allow their children to spend their own hard earned money on one-time excess. I will stop right here, and be very clear that I think the Prom is a nice milestone in a kid's life. It's a bonding thing, and part of the closing of the High School chapter of their lives. However, I do not think this rite of passage needs to include channeling Beyonce or JayZ for the weekend (I almost fell off my chair when my daughter told me that couples were choosing their music for when they got out of their limo, and were captured on the official Prom video).

So, I cheer for the parents and children in this article who are realistic enough to make tough choices and set priorities, even if it means facing up to the fact that food and shelter are higher on the list than hair and nails. I challenge the parents who say they will make whatever sacrifices necessary to ensure their child doesn't miss out on Prom with all the trimmings, to ask themselves what they are teaching their children about coping with adversity. Remember, there's a difference between what you want and what you need. If the key objective is going to the Prom, then whether the dress was seen before should be irrelevant. I've said it before, if it's clean and paid for it's nobody's business.

Okay, okay you think I'm being harsh and judgmental. Well, unfortunately sometimes life presents us with harsh realities and tough choices. Sometimes those choices don't have to be all or nothing. You can make a list and set priorities. In my professional life, we do this all the time. Make a list of all the things to be delivered with the project, separate the "must haves" from the "nice to haves", determine what can be done within time and budget constraints, and redline (or defer) the rest. This is a life skill we should be teaching our children. This is part of preparing them to be responsible adults.

Here are some suggestions:

• Skip the professional make-up job. This is a 100% consumable spend on something that lasts for a couple of hours and will be washed off. I include in this the offers at department stores to "do your make-up" if you purchase some amount of make-up. While this is slightly less than one time use, will this make up ever be used again and is it needed. Most girls already have make-up, and can pick up a shade of eye-shadow and a new lipstick at CVS or Target for less than $10. No one will know the difference (and who cares if they do?).
• Skip the salon "up-do". The amount saved will go a long way toward the cost of the dress or the Prom ticket, and again this is a one and done use of money. I've rarely met a teenage girl who either can't fix her own hair, doesn't have a friend who can fix hair, or doesn't have a Mom (or Dad) who can fix her hair.
• Skip the photographer, and take your own pictures.
• If this is a dress to be worn once, don't invest too much money. It's an investment with no return. This gown will not be reviewed by Joan and Melissa Rivers on E! Stay away from stores that specialize in selling Prom gowns, this is their Super Bowl. There are plenty of discounters like Loehmann's where you can get a beautiful dress for under $200. Consignment or Charity Thrift shops in affluent areas often have really high end stuff (tuxes too). Call it vintage, and suddenly it's chic. My college roommate bought a fur coat for $35 at the Wellesley Thrift Shop (and she was a trust fund baby).
• In general, the whole fake nail thing is a huge waste of money Prom or no Prom, so skip it.
  

As a matter of full disclosure, my oldest daughter went to Prom twice when she was in High School. She did her own hair, nails and make up (not because I couldn't afford to pay for a trip to the salon, but because she and I both agreed it was a waste of money). I think that's an important dialog to have with a child. The difference between what you can afford, and what's worth spending on. I helped her pay for the gowns, but they were not over the top (and they are still hanging in her closet, like souvenirs, and were never used again). So, now that Prom season is upon us, I hope you have that dialog with your child too. If times are tough financially right now, use this as a teaching opportunity about setting priorities rather than about ignoring reality or charging up credit cards with nice to haves. Remember, in the choice between movies and socks, socks win. Since this is a milestone on the road to adulthood, teach your child how to make adult choices by making them yourself as well. What do you think?

Must Read from NYT: Without Cafteria Trays, Colleges Find Savings

Without Cafeteria Trays, Colleges Find Savings in today's New York Times highlights the synergies between economic and environmental good sense. "Schools are shelving the once-ubiquitous trays in the hopes of conserving water, cutting food waste, softening the ambiance and saving money." The savings on both water and wasted food are significant, not to mention potentially avoiding the dreaded "Freshman 10". No more loading up the tray with extra items that end up in the trash (remember: Enough is as Good as a Feast), but what are they going to use for sleds? Read more...

In the News: Are Teenagers Discovering the Difference Between What They Want and What They Need?

I had to come back to my post Enough is as Good as a Feast to add this link to an article in today's New York Times entitled "Losing Its Cool at the Mall" http://tinyurl.com/c7wblw, a very interesting piece on the changing spending habits of teens (reported to be down 14%). Although this is bad news for some retailers, particularly Abercrombie & Fitch which is featured in the article, it's good news in terms of growing economic common sense in the teenage population. Is it fleeting?

Enough is as Good as a Feast

This is my favorite line from "Mary Poppins". Sometimes we glean wisdom from the strangest places, but good economic sense rings true wherever we find it. How much is enough? From a career perspective, it's always current compensation + n. At least in my industry, but that's not the focus of this post.

At the heart of our current economic woes is leverage. Using leverage to spend more than we earn, and losing sight of the difference between what we want and what we need.

So, how much is enough? This question can be applied to so many aspects of our day to day life. How big should a restaurant portion be (seriously, does anyone need a half pound burger?)? How many game systems does a kid need? How many pairs of jeans? How big a house? How fancy or big a car?

I made my children wait a very long time before I finally bought them a PS2 a few years ago. They have a few games. Maybe they get one at Christmas, but that's about it. Until they were teenagers, I refused to buy anything rated "mature". No one became a gaming addict. I was shocked to learn from my boys, that a lot of their friends had all the systems. Why? No wonder they spent all their time playing video games! How much is enough? How can a child learn about making choices or deferred gratification if they've been taught that they can have one of every flavor?

How many pairs of jeans, or handbags, or shoes are enough, and what kind? Does a kid really need 5 pairs of jeans, one for every day of the school week? Will they suffer permanent social outcast status if, heaven forbid, they wear the same pair twice in the same week to school? My family owned a clothing store, so I never wanted for nice clothes. Still, my parents impressed upon me that they still had to pay wholesale to the business for our clothes, so I got what I needed rather than anything I wanted. My father grew up during the depression, and while the family owned a business and was in good financial shape for the times, he wore the faded clothes from the store window. I cringe when I hear about people charging clothes on credit cards, and paying them off over time. Much too much focus on who has what kind of clothes! Don't get me wrong, I love fashion as much as the next person, but I couldn't sleep at night if I was in debt for it. Like my mother used to say: "if it's clean and paid for, it's no body's business".

No discussion of today's economic troubles can skip the how big a house question. This question really has a few parts. How big? What needs to be in it? Is owning always better than renting? Again, how much is enough? A few decades ago, families were frequently larger than is typical today, but they often managed to live in much smaller houses. I've met people who were one of 8 or 9 kids who grew up in modest Cape Cod houses with one bathroom. They turned out fine, and I don't think anyone went dirty. They learned to share, and how to wait their turn. Both excellent attributes. Over the past decade, there has been an explosion of home decorating shows on TV. They've raised the bar to a whole new level in terms of what amenities a house should have. Granite countertops, stainless steel appliances, marble bathrooms, all "necessary" if you want to maintain your home's resale value. Do you need these things? Really? These things are nice, and you might enjoy living in your home with them, but if you can't afford to pay cash for them then you can't afford them. So then save up for them, right? Unfortunately, that's not what happened. Deferred gratification went out the window. Enter the Home Equity Line of Credit (HELOC), and the Mortgage Refinancing with Cash out. Take out a second mortgage on your house? Sounds scary, but that's essentially what a HELOC is, just sugar coated. Refinance your mortgage, and take out your equity to spend on home decorating? I refinanced my mortgage twice, once from 30 years to 20 at a lower rate, and then again from 20 to 15 years at an even lower rate (always fixed rates!). It never occurred to me to sign up to pay more for longer! This of course explains why there are now so many people who once upon a time bought houses they could afford, but now have much bigger (now underwater) mortgages and are in deep trouble. They do, however, in many cases, now have granite counter-tops, wall mounted flat panel TV's, and restaurant grade appliances. None of these will be much consolation if they lose their house. I'll save "should everyone own?" for a future post.

I'll return to my basic premise that you can't spend more than you earn. HELOC's and Refi/Cash-outs are just another example of invisible money. Money, whether visible or invisible, still has to be counted. Borrowing more than you can afford to pay back on a bet that the collateral you put up will keep rapidly increasing in value is just what it sounds like: gambling. This makes a lot of Main Street an awful lot like many on Wall Street. Think about it.

Bottom line, Mary Poppins had it right. Enough is as good as a feast.

Postscript: I had to come back to this article and post this link to an article in today's New York Times entitled "Losing Its Cool at the Mall" http://tinyurl.com/c7wblw, a very interesting piece on the changing spending habits of teens (reported to be down 14%). Although this is bad news for some retailers, particularly Abercrombie & Fitch which is featured in the article, it's good news in terms of growing economic common sense in the teenage population. Is it fleeting?