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Capital One's Annual Survey Finds Back-to-School Shopping Will Be Impacted by Economy

July 21, 2008 at 12:56 PM EDT

Economy makes back-to-school shopping an opportunity to teach practical money management skills

MCLEAN, Va., July 21 /PRNewswire/ -- American families are feeling the pinch when it comes to back-to-school shopping, according to Capital One Financial Corporation's (NYSE: COF) eighth annual back-to-school shopping survey. Nearly two-thirds of parents surveyed (62 percent) reported that current economic conditions like rising gas and food prices and talk of a recession will impact how much they spend on back-to-school items this year.

"Annual back-to-school shopping trips can put a strain on the family budget and today's economic conditions mean that smart spending is essential. That's why it is more important than ever for parents to teach teens about money, budget management and the difference between needs versus wants," said Diana Don, director of financial education for Capital One. "Our research shows that teens are eager to learn about money management and they want to learn about it from their parents. Back-to-school shopping presents a perfect opportunity and a real-life situation to discuss finances."

This year's survey of 1,260 parents and teens also finds that only 14 percent of teens have taken a personal finance class in school and 69 percent of teens say that what they know about managing money, they learned from their parents. While most parents see themselves as positive financial role models for their kids, many miss a golden opportunity to use back-to-school shopping as a time to discuss finance management. The survey revealed that:

-- Seventy-seven (77) percent of parents have not planned a back-to-school budget with their child.

-- Seventy-six (76) percent of parents have not made a list of back-to-school items to purchase with their child.

-- Fifty-four (54) percent have not discussed the difference between "needs" vs. "wants."

-- Sixty (60) percent have not discussed back-to-school finances at all with their child, a substantial increase from the previous year (compared to 36 percent).

Capital One's survey also found some surprising facts about what teens are most interested in learning when it comes to money, as well as insight into back-to-school shopping lists and planned spending amounts.

What are teens interested in learning?

Half of teens (50 percent) expressed an interest in learning more about managing money and 76 percent say they want to learn about the basics of finance now because it will help them make better financial decisions down the road. With thoughts of the future on their mind, 76 percent of teens said they were interested in learning about financing big purchases like a car or a home while 70 percent want to learn more about investments.

What are they buying? Where are they shopping?

Clothes and traditional school supplies such as notebooks, backpacks, pens and pencils continue to top back-to-school shopping lists this fall for both parents and teens. Many parents plan to stick to the school supply essentials this year: Fifty-three (53) percent of parents said current economic conditions will impact what items they purchase for their children, with 55 percent cutting back on clothes and 25 percent cutting back on electronics, such as a PDA or an iPod. Most parents (41 percent) plan to do their shopping at discount retailers.

How much are parents spending? Are parents going with their teens to shop?

Many parents will spend less this year than last: the number of parents who plan to spend over $125 on back-to-school shopping dropped to 45 percent this year compared to 52 percent last year. Eighty-six (86) percent of teens expect their parents to join them on back-to-school shopping trips but only 38 percent of parents discussed how much they would spend on supplies with their teens.

Financial education: What parents and teens can do to shop smart

"Parents should use back-to-school shopping to start a conversation and reinforce basic money management skills with their teens," added Don. "There is a wealth of free information available to help parents and teens talk about money and finances - but the most important thing is to simply start the dialogue."

Capital One offers parents tips for working with their teen to develop good money management skills:

-- Make back-to-school shopping a family affair: It's a great opportunity for kids to learn valuable hands-on lessons from their parents.

-- Do your homework: Talk to teachers in advance and try to get a list of required school supplies so you can buy in advance (maybe even on sale).

-- Crunch numbers together - establish a budget: Determine how much you're able to spend in advance and stick to the amount.

-- Make a list: Prepare your shopping list in advance. Try to distinguish between "needs" and "wants" on the list and prioritize the needs first.

-- Shop smart: Make sure you shop around for the best price and the best quality and use coupons when possible.

-- Get more tips (if you need them): Capital One offers a number of resources on budgeting and savings and has partnered with the national consumer organization Consumer Action to create a complete guide for parents called Talking to Teens about Money, available at www.money-wise.org.

For additional help, parents and students can visit the Jump$tart Coalition for Personal Financial Literacy home page at www.jumpstart.org and search the "clearinghouse" for financial curriculum and education materials.

Survey Methodology

For the Capital One Study Back-to-School study, Braun Research was engaged to conduct 1041 interviews in 1260 households with 758 parents of teenagers age 11 to 17 and 502 teenagers age 11 to 17 across the United States. Surveys were conducted by telephone from July 1st through July 8th, 2008. The margin of error for the interview is plus or minus 3.56 percentage points. Interviews were monitored at random.

Sampling for this study was conducted across the United States using a national probability sample of all exchanges and area codes of households with someone between the ages of 11 and 17 living there. All interviews were conducted using a computer assisted telephone interviewing system. Statistical weights were designed from United States Census Bureau statistics.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries collectively had $92.4 billion in deposits and $147.2 billion in managed loans outstanding as of June 30, 2008. Headquartered in McLean, VA, Capital One has 740 locations in New York, New Jersey, Connecticut, Texas, and Louisiana. It is a diversified financial services company whose principal subsidiaries, Capital One, N.A., Capital One Bank (USA), N. A., and Capital One Auto Finance, Inc., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

SOURCE Capital One

CONTACT:
Diana Don
of Capital One
+1-703-720-2371
Diana.don@capitalone.com