It is important to teach children about digital transactions, because the entire world is moving away towards digital payment for everything. While two thirds of the young people still prefer cash today, this is quickly changing — Not least because of the growing range of convenient and uncomplicated cashless payment methods, this proportion will shrink in the future.
While at the beginning of learning financial literacy there are usually (tangible) coins and notes, even younger children need to grasp the idea of digital payment, and older children particularly need to be concerned with transferring the basics of responsible use of money to the digital world.
Why you should teach children about digital transactions
The entry into the world of cashless payment usually takes place with the changeover, instead of paying the pocket money in cash, but into a young person’s account. The option of now being able to pay with a card or a phone has an impact on the consumer behavior of young people: card payments are less real than cash payments, which is why more tends to be spent.
The digital shopping world also opens its own account. Online shopping is currently the biggest debt trap among young people.
With the intensive use of smartphones, in-app purchases and online games become more relevant. In the latter case in particular, mechanisms of group and status pressure are used, elements of gambling are used and the feeling that real money is spent is obscured by virtual currencies. According to the research, the game industry had a turnover of $150 billion last year.
How can you avoid digital debt traps?
For a confident handling of money in online worlds, it helps to make digital means of payment as tangible as possible. In order to transfer expenses for digital products such as in-app purchases, streaming services and online games into real life, it makes sense to equate them with wishes in the offline world. So if the child wants a new superpower for the character in the online game, this should be treated equally in relation to other wishes such as a concert ticket or a new item of clothing.
It is also important to take advantage of cashless payments, such as the fact that all expenses can be viewed online. Parents can get into the habit of keeping an eye on account movements and checking them regularly with their children via e-banking access. This gives you the opportunity to discuss why certain expenditures were made, whether others were left out, and what values and priorities are behind consumer decisions.
Because that’s what it’s all about in both the analog and digital worlds: understanding what triggers a wish and how much it is worth fulfilling. If you are aware of your own motivation, values and priorities, this leads to a reflected consumer behavior and prevents frequent mistakes in dealing with money both online and offline.
A tip for dealing with online games:
Play the child’s favorite game together and let the child explain what is particularly attractive about it. This brings insights into how the game works. At the same time, you will learn a lot about the motivation of the child to be interested in exactly this game and, if necessary, to want to spend real money on it.