With Internet Matters finding two in five parents (43%) are concerned about their children's spending, and research revealing that lifelong money habits are set by the age of seven, never has it been more important to educate your kids about spending.
Louise Hill, COO and Co-founder of GoHenry, says: "At GoHenry, we want to help make every kid smart with money, so they understand delaying gratification and money management basics around spending, saving and investing. Research shows that children who receive this kind of financial education are £70,000 richer in retirement and much less likely to be unemployed or in low-income jobs as adults."
The good news is, parents possess the power to shape the core money behaviours of their children, and help them to become financially capable adults who understand how to budget, save and spend without getting into debt.
You need to talk to your child about spending wisely if:
- Your child always runs out of money and consistently borrows from you and their friends
- Your child makes purchases on your cards without asking
- Your child is spending too much money in a certain area such as gaming, fashion, or going out
- Your child buys from untrustworthy sites
- Your child gets pocket money and or earns money, but never has any left
- Your child doesn’t understand the value of money
- Your child confuses needs with their wants
10 Ways to manage your child's spending
1. Using a prepaid debit card app with spending controls like GoHenry allows you to set spending limits on online purchases, in-store buys, and ATMs. Particular areas to talk to your child about are:
a. Food delivery apps. Deliveroo, Just Eat, and Uber Eats have made food delivery so easy, but there is a cost to their convenience. Aside from delivery fees, items are often more expensive when you use an app. Persuade your kids to order and collect food, or make it at home.
b. Amazon. It’s not a good idea to give your child access to your account, so add their prepaid debit card to the checkout to stop them from using your money. Also, set up Two-Step Verification to add an extra layer of security to your account log-in. Your phone will notify you when someone tries to make a purchase.
c. Video game in-app purchases for gaming currency, skins, and subscriptions can quickly add up. Switch off in-app purchases and use Apple's Screen Time setting to prevent unauthorised or unwanted purchases on your family's Apple devices.
d. Streaming services. You may have paid upfront, but your child can still buy new films for around £15+, as well as extra channels on existing subscriptions.
e. Manage parental controls on video game consoles. Thanks to loot boxes, skins and in-game currencies, gaming is a primary concern when it comes to spending. To prevent your kids from being tempted by these microtransactions, use the parental controls for your family video game consoles and devices.
2. Turn off autofill credit card information. You can stop iPhone and Android phones from auto-filling via settings. At the same time, remove saved credit card information from your browser. This is where your web browser offers to save your credit card information so that you can pay faster next time – which makes it easy for your kids to buy something without you knowing.
3. Check your statements and receipts. Life is busy, and it's easy to miss your child spending on your card, especially if they are in-game purchases. Make a point of keeping an eye on your bank and credit statements and also your emails for order notifications and subscriptions.
4. Limit their screen time. To stop kids from spending too much online, you can also negotiate how much screen time they are allowed. The two things go hand in hand, thanks to cleverly placed adverts and influencer marketing (see below for more).
5. Teach them about needs vs wants. Explain a need is required for your survival, such as rent / mortgage, food, and clothes. A want is desirable but won't affect your life if you don't have it.
6. Encourage them to make a budget. Creating a budget and tracking your child's spending is key to spending wisely. If your child knows how much they have to spend each week and then tracks outgoings they will be able to tell when it’s time to stop spending. Budget tracking can be done on paper, or via an app like GoHenry.
7. Help outline their saving goals. Spending wisely is also about understanding how to set weekly savings goals so your child can afford to buy more expensive items. A good way to do this is for your child to transfer a percentage of pocket money straight into their savings.
8. Talk to them about advertising. Marketing and advertising are designed to encourage us to spend, spend, spend! This is why it's worth talking to your kids (and teens in particular) about how advertising works on social media, gaming and with influencers – and how it can push us to buy things we might not really want or need.
9. Talk about peer pressure. It's essential to talk to your child about how everyone has different rules and behaviours around spending. Some friends will always buy things, others will be more cautious, and some may never have any money. Part of being responsible is being true to your money rules, even when your friends pressurise you to break them.
How much control should you have over your children's spending habits?
As much as you don't want to see your kids waste money, practical hands-on experience is the best way for children to learn about money management, which often means stepping back as a parent.
Beth Zemble, VP for Education at GoHenry, says "By providing kids with pocket money, you allow them to practise their money skills. This then helps them to consider questions like, 'Was this a good purchase? Am I happy or sad that I spent my money? Do I wish I had saved for something else? "
Use GoHenrys spending controls
When kids first start spending, it does pay to make their money journey more manageable, and this is where the spending controls on the GoHenry app come into play. As a parent, you can set limits on ATM withdrawals, along with single and weekly transactions. You can also limit where your child can use their card, for instance, on the high street, at ATMs, or online.