It’s just too easy. To purchase anything, from anyone, at any time online, that is. And, when things are easy, a false sense of comfort sets in and that can spell disaster for anyone not paying close attention to their money.
No one is more prone to financial calamity than kids growing up today in a nearly cashless society. Amazon.com has changed the culture of how we buy. Kids want to purchase clothes, cell phone accessories, music, personalized gifts, you name it. They want to shop, click, and see the item magically appear on their doorstep within two days. Often, they don’t fully comprehend that for every click, there is an equal and opposite sucking sound that comes from a very real bank account (usually mom and dads).
The discussion for families is two-pronged. First, teaching the value of every dollar spent and, second, teaching kids what precautions to take to make sure that dollar doesn’t meet up with a scam or identity theft online.
On the value side, experts agree, applying these old school habits is key:
Setting up a bank account. If your child has a job or gets an allowance, or has a job of any kind, watching a bank account grow (and shrink) is important. Your child can download the bank’s app to easily monitor and track his or her spending.
Setting a budget. From that bank account teach your child the importance of a budget and how every withdrawal affects the total. Sounds elementary, but don’t make any assumptions and cover the very basics. TheMint.org has a great budgeting tool for working teens and plenty of great information on how to set up, balance, save, and even give from your checking account.
Carrying cash. If it’s the parents, account hooked to Amazon, Etsy, or any other favorite online store, make sure your child has the cash on hand to pay you for the purchase at the time it’s made. That way, he or she can feel the actual cash going out. Teaching your child to carry cash — that by the way is part of the set budget — is also a great tool if you are in an actual store shopping. When the question comes, “Can I get this?” Instead of saying “yes” or “no,” you can ask, “Do you have your cash with you?” Spending cash on an item is far more painful than using a debit card or check for a teen.
Take the time to do it right. To reinforce the value of physical money, require that your kids earn the money to pay you back in cash for online transactions that you okay on your credit card. Have them physically count the cash back to you and understand what it takes to earn $10 and what it feels like to give that $10 to another person in exchange.
Set consequences. Coach along the way. Sit with your child and run through transactions instead of yelling “fine, go ahead,” from the other room. Know what they are purchasing and take the time to discuss the impact to their budget before they click.This includes setting and following through with clear consequences if your child or teen abuses your credit/debit card or doesn’t follow the safe purchasing guidelines.
Repeat, repeat, repeat financial principles. What you taught your child in fifth grade about money isn’t going to stick through high school. Make sure you sit down and go over budgeting, saving, and the importance of credit several times throughout the year. Money isn’t a favorite topic and kids forget so don’t be afraid to get repetitive, even annoying with the money management conversation.
On the Safety Side
As buyers become more savvy to online scams, the scammers respond by getting more sophisticated in their tricks. So beware. Go over the digital risks with your kids. Research shows that online auction fraud was the most reported type of fraud and accounted for 44.9% of consumers’ complaints. Non-delivered merchandise and/or payment made up 19.0% of complaints. Check fraud represented 4.9% of complaints. About 70% of the fraud victims were scammed through www (e.g. online auctions). About 30% of the victims were scammed by emails (phishing).
Tips for safe shopping online:*
- Verify the vendor. Verify vendor legitimacy by checking physical addresses of shops and vendors when purchasing. While your teen may be surfing on his or her own, sit next to them and teach them how to validate a site. Consider the design, customer reviews, etc. You can also Google the site such as “ZZ&JJ Boots and Complaints,” to get insight. Give kids ammunition about scams and some ground rules for shopping online.
- Keep credit card info guarded. Teach your kids not to give out credit card information in “exchange” for some cool offer or a discount.
- Secure your browser. Be sure your browser is secure and has the most up-to-date encryption capabilities by using the latest version available from the manufacturer.
- Avoid public wifi. Don’t assume that public “hot spots” are secure. Unless you can verify that a hot spot has strong security measures in place, you shouldn’t send sensitive information like your credit card number over that network.
- Avoid “free” offers. Teach your kids to avoid free screensavers, e-cards, or other downloads that could carry dangerous viruses. Keep your anti-virus and anti-spyware software current along with your firewall.
- Know how to file a complaint about suspected fraud with the Federal Trade Commission.