According to T. Row Price’s 14th Annual Parents, Kids & Money Survey, 93% of parents said they believe it’s important to discuss factors around maintaining a budget with their child. However, only just over half of parents actually have these conversations with their children. On top of this, research reveals that lifelong money habits are set by the age of seven. This all highlights the important role that parents can play in educating their kids about budgeting and spending from an early age.
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 nearly $85,500 richer in retirement and much less likely to be unemployed or in low-income jobs as adults.
Louise Hill, COO and Co-founder of GoHenry, says: "The good news is that parents have the power to shape their children's core money behaviors and help them 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, clothes, or going out
Your child buys from untrustworthy sites
Your child gets an allowance and/or earns money but never has any money
Your child doesn't understand the value of money
Your child confuses needs with their wants
10 Ways to manage your child's spending
Topics covered in this section...
Using a prepaid debit card app
Manage parental controls on video game consoles
Turn off autofill of credit card information
Go through your statements and orders
Limit their screen time
Teach them about needs vs wants
Encourage them to make a budget
Help outline their saving goals
Talk to them about advertising
Talk about peer pressure
1. Using a prepaid debit card app
A prepaid debit card for kids 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:
Food delivery apps. DoorDash 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 go pick the food up.
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.
Video game in-app purchases for gaming currency, skins, and subscriptions can all add up quickly. Switch off in-app purchases and use Apple's Screen Time setting to prevent unauthorized or unwanted purchases on your family's Apple devices.
Streaming services. You may have paid upfront, but your child can still buy new movies for around $15+ and extra channels within certain services they can subscribe to. Have a no-buying-without-asking rule.
2. Manage parental controls on video game consoles
Thanks to loot boxes, skins, and in-game currencies, gaming is a primary concern regarding spending. To prevent your kids from being tempted by these microtransactions, use the parental controls for your family video game consoles and devices.
3. Turn off autofill of 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, but it's also expensive if your kids are always buying something without you knowing. Different browsers store credit cards differently from one another, but you are looking to switch off autofill.
4. Go through your statements and orders
Life is busy and it's easy not to spot your child making purchases 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.
5. 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).
6. Teach them about needs vs wants
Make sure your child understands needs vs wants. Explain that a need is required for your survival, such as rent, food, and clothes. A want is desirable, but won't affect your life if you don't have it.
7. 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 (their allowance minus any money going towards savings = a budget) and then tracks outgoings (money spent), they will be able to tell if they have to stop spending or if they can afford something. Tracking can be done on paper or via an app like GoHenry.
8. Help outline their saving goals
Spending wisely is also about understanding how to set weekly savings goals as part of your budget so you can afford to buy more expensive items. A good way to do this is to create a budget (as above), and then the day allowance comes in, divert a percentage into a savings pot.
9. Talk to them about advertising
Marketing and advertising are everywhere, encouraging kids to spend, spend, spend. This is why it's worth talking to your kids and teens about how advertising works on social media, gaming, and with influencers and how its aim is always to push you to buy things.
10. Talk about peer pressure
Nothing will persuade your child to spend faster than their peers. This is why it's essential to talk to your child about how everyone has different rules and behaviors 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 pressure 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.