How to Prepare Teens to Avoid “Digital Debt”Mar 16, 2018
What’s the future of spending? In the last 20 years, we’ve gone from cash to plastic credit to NFC payments through our phones. The next generation will definitely find new ways to digitize our money — as parents, it’s more important than ever to ensure easy spending doesn’t turn into easy debt for teenage kids.
Studies have shown that digital payments result in spending up to 30 per cent more. Not having to deal with coins and bills makes digital spending easy. The reality for parents is — just like buying a smartphone — kids are exposed to digital payments at a younger age. Spring break brings plenty of spending opportunities for Canadian teens. What can parents do to teach them about avoiding the need for debt relief when they use digital payment tools? Here are a couple ways to get started.
If you’ve scheduled a vacation, help educate on digital spending. Teens may not yet grasp that paying on credit is more than money-in, money-out. Use a vacation to show that, while credit cards make spending easier, there are interest charges if monthly payments aren’t made. You can also show that NFC smartphone payments are no different.
Making an international trip? Throw in a lesson about the need to look for currency conversion fees.
Show teens how technology can track spending too. The newest smartphones are more than spending machines – they can be a force for good with powerful budget trackers. For spring break, set up a spending plan for your teenager and get them to track their purchases in an app like Wally or You Need a Budget. Here they can track where money is going and make adjustments to fit their limit — a budget is a strong self-teaching tool, as Gail Vaz-Oxlade discusses on her website.
Want to learn more? This podcast focuses a wider lens on #KidsAndMoney. What can you do as a parent over spring break to provide financial literacy for kids of different ages? BDO Licensed Insolvency Trustees give their best debt avoidance tips.