Money in the digital world
Cash is still the most popular means of payment. Studies show that two thirds of young people currently prefer to pay with notes and coins. However, in view of the constantly growing range of convenient and uncomplicated cashless payment methods, it is foreseeable that this proportion will shrink in the future.
While financial literacy is best taught to younger children with tangible coins and notes, older children need to be taught the basics of responsible money management in the digital world.
Card payments are less real than cash payments, which is why more tends to be spent.
Entry into the world of cashless payments usually comes with the switch from paying pocket money in cash to a youth account. The option of now being able to pay by card has an impact on young people's consumer behaviour: Card payments seem less real than cash payments, which is why they tend to spend more. Having their own account also opens up the world of digital shopping. Online shopping is currently considered the biggest debt trap for young people.
But it's not just having your own account that poses challenges: With the intensive use of smartphones (99 per cent of Swiss young people between the ages of 14 and 19 have their own smartphone), in-app purchases and online games are becoming more relevant. With the latter in particular, mechanisms of group and status pressure are exploited, elements of gambling are used and virtual currencies are used to disguise the feeling that real money is being spent.
How can you avoid digital debt traps?
To teach children how to handle money consciously in online worlds, it helps to make digital means of payment as tangible as possible. This involves transferring spending on digital products such as in-app purchases, streaming services and online games to real life and equating 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 in the same way as other wishes such as a concert ticket or a new item of clothing.
It is also important to utilise the advantages of cashless payments, such as being able to view all expenses online. Parents can get into the habit of regularly checking account transactions with their children. This provides an opportunity to discuss why certain expenses were made, whether other things were sacrificed and what values and priorities are behind consumption decisions.
Because that's what it's all about in both the analogue and digital world: understanding what triggers a desire and how much its fulfilment is worth. If you are aware of your own motivation, values and priorities, this leads to more reflective consumer behaviour and prevents frequent mistakes in dealing with money both online and offline.
A tip for dealing with online games:
Play the child's favourite game together and let the child explain what is particularly appealing about it. This will give you an insight into how the game works. At the same time, you will learn a lot about the child's motivation for being interested in this particular game and possibly wanting to spend real money on it.
The Association of Swiss Cantonal Banks
The cantonal banks are committed to promoting general financial education. The focus is on FinanceMission, a joint initiative of cantonal banks and teachers' associations to promote financial literacy in Swiss schools. In this way, the banking group is helping to combat youth debt and actively assuming social responsibility.
www.kantonalbank.ch/finanzen-im-griff
About the author:
Lena Gugenberger is an educator and financial literacy expert at Three Coins.
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