Teach Your Kids how to Manage and Protect their Digital Finances
Help Them Understand
Kids go online at younger and younger ages, and even the youngest want to make in-app purchases. That means it’s never too early to start teaching your children about digital money. Most kids can understand the concept of money by age five, but you know your child best. Here are some tips to help them understand that real and virtual money have the same value:
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Use real money first- It is best to have young children use cash and coins first before introducing the concept of digital money.
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Take a trip to the bank- If they have an allowance or birthday money, you can open a savings account and deposit their savings.
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Set up digital access- Once they’ve opened an account, you can help them register for online access. Show them the deposits they made at the bank — seeing their deposit online can help them make the connection between real and digital money. Help them make regular deposits until they understand that their real money and virtual money are the same.
Help Teens and Tweens be Smart Online Consumers
When your kids are a little older, they will experience different challenges. Following influencers, constantly seeing ads pop up on websites, and noticing trends on social media, teens and tweens today are often one click away from an impulse purchase. Now’s the time to start the conversation with your kids about managing their money in a digital world. The same rules apply to online shopping as they do to going to the mall. Have a conversation about financial basics — needs versus wants, how to budget, and how to save a portion of their earnings. You’ll also want to make sure they understand these digital payment options so there are no surprises when the bill comes or they check their account balance.
Credit cards
Credit cards operate with a line of credit, typically tied to a bank. When they’re used, money is borrowed from the bank and billed on a monthly basis. If the whole balance isn’t paid, the bank will charge interest, which can be as high as 20%. If a kid can’t afford their credit card balance, they’ll be paying more than sticker price for their purchases. For example, if the card has a 20% interest rate, and they owe $1,000 but only pay $100, they'll pay an extra $180 in interest on the balance.
Debit cards
Debit cards act more like cash with the money deducted immediately from a bank account when used. Some debit card purchases are free, but some can have extra fees. You can find debit cards for kids that allow parents to set limits.
Mobile payments
Mobile payments allow kids to pay for purchases through an app on their phone or tablet. Unlike credit or debit cards, they often allow person-to-person payments
Cashless payments and online banking make buying and saving easy and convenient. It’s no wonder their popularity is growing. But just as you babyproofed your home and gave them safety lessons when they were young, you need to set up online safeguards and parental controls to protect your kids and teach them how to avoid the hidden dangers. Familiarize yourself with the threats, then teach your kids how to defend against them.
Click on the PDF below to read more about cybersecurity threats and the defense skills you can teach your kids to protect themselves.
