Children have been given their pocket money in coins and notes for as long as I can remember. In fact, according to recent research we conducted, 84% of children1 still receive their pocket money in cash. While this isn’t totally surprising, I was interested to find out that many parents are also increasingly exposing their children to digital money, spending an average of $170 on online purchases for their children per year.
Although this isn’t necessarily an issue, I was also surprised to discover that the majority of children (64%) are not contributing pocket money to these online purchases, meaning they’re essentially getting an extra $170 in digital pocket money each year for free. This is equivalent to approximately 33%2 of their overall pocket money – a significant amount.
So, how does this disconnect between the administration of pocket money in cash and exposure to digital purchases impact the value that our children place on their pocket money?
According to our research, 33% of parents think digital transactions make it harder for their child to understand the value of money and one in three (35%) of children simply don’t know how digital purchases are paid for.
It’s clear that there is a tension between how pocket money is given and digital purchases made for children, and this is resulting in our children believing their pocket money is for buying ‘real’ things with cash, while digital items are generally given to them for free.
So, how can you help your children understand that their pocket money has the same value in the ‘real’ world as it does in the digital world?
This question got me thinking about when I used to teach my children about the importance of saving their pocket money for bigger purchases and contributing towards smaller ones. I used simple techniques when we went shopping for example, like asking them to pay for a small treat from their own pocket money, or showing them how much a bigger item costs so they could work out how much they needed to save and for how long.
My children are now teenagers – living and working in an increasingly cashless world. But these little lessons have taught them the value of their own money, whether they’re buying a new skirt at the shops or the latest movie online.
Something that I suggest to parents is to take the simple lessons you apply to traditional money and translate them to the digital age. If you’re buying your child a game for their smartphone, show them how much it costs and explain that they’ll need to pay for the purchase with their pocket money.
Digital payments are a constantly evolving space and navigating it with children can be challenging. Apply these simple tips, and your children should grow up with a firm understanding of the value of their money – in all forms.
For more handy tips for teaching kids about money, visit The Beanstalk.