Halifax and Internet Matters found that the number of account holders aged 11-18 who use online banking has increased by 40% in just two years. This means there’s a need for parents to ensure their kids know how to manage their money online.
“Kids need be having conversations about money,” said Russell Winnard from advice service Young Money. “It’s important to talk about where money comes from and discuss the differences between needs and wants.”
So in a world of online banking, prepaid cards and contactless - how can parents teach their children the value of money - and the importance of taking control of it?
1. Introduce them to digital money early.
If you use online banking or debit cards then your child will be exposed to ‘virtual money’ almost from birth. “If virtual money is already part of your family life, don’t forget to show your growing child this bit as well,” the Money Advice Service states.
They advise showing your kids the balance on your current account online or on an app. Then use your card to shop for food, before showing your child the balance again so they can see how it’s less than before. Do the activity again before and after withdrawing cash, or shopping online. To give them a clear idea of the impact of spending on your finances, even when coins and notes don’t change hands.
2. Teach your kids how to learn more about their money online.
Helen Saxon, chief product analyst at Money Saving Expert, advises getting your kids to investigate what they can find out about their bank account online, starting with interest rates: “Get your kids to monitor the rate of the account, so they’re involved. Put your child in charge of checking the interest every month to see if it’s still paying a decent rate – maybe bookmark the bank’s interest rate page on your web browser so it’s easy to find.”
3. Make sure they know the online safety risks.
Fraud and scams in the online banking world are more sophisticated than ever so it’s vital to start teaching them basic safety from a young age, according to Saxon.
“You’ll need to help them pick a password, and help them learn they shouldn’t share this with anyone (read the HuffPost UK guide on how to create a strong password, here),” she said. “Get them to use your email address (or a family one that you can access) so you can discuss any emails from the bank (and filter out any spam ones). And tell them to tell you immediately if anyone asks them for money from their account.”
If your kids are slightly older, it’s important they’re equipped to know further safety measures. Winnard said parents should remind kids to check the URL of websites for HTTPS (the ‘S’ is for secure) when making payments online; and to always question emails or texts that you’re not expecting.
To see if they’re likely to be duped by a fraudulent text or email, get them to take the Take Five test, advised Winnard. It puts kids in situations to do with online banking and asks them whether they should trust an email or text. It then explains why/why not the messages may be fraudulent.
4. Use a prepaid card.
Rather than paying kids pocket money in cash, parents can get prepaid cards for kids to introduce the idea of having a debit card while also retaining some control. Mums and dads can set automatic pocket money transfers, tasks and spending rules for their child while also teaching them to save and spend responsibly. “These cards also don’t allow spending in places like off licences or betting shops, so can provide a bit of extra protection,” said Saxon.
GoHenry’s founder Louise Hill, from Hampshire, came up with the idea with a group of friends after being disappointed that there weren’t the right tools to teach her kids - now aged 16 and 19 - about money. “The high street banks simply didn’t offer what we knew we needed,” she told HuffPost UK. ”Our children borrowed our cards to spend online, pocket money using cash was often a source of family debate - who’d had what, for what, and when.”
5. Ensure they still know about saving.
If your kids are accessing money online through apps, it gives them a clear view of how much money they have in their account and, if they have a savings account, how much money they have in there.
“The most important thing when saving is having a challenge or goal and a reward when that goal is reached,” Winnard said. “Experiencing delayed gratification is important for lifelong habit forming, whether that’s saving up for a computer game as a child, or a new car as an adult.
“Habit forming is less about how much, savings could be as little as 10p every week, but the regularity and experience will help build important attitudes and skills.”