In the age of tapping and clicking, cash is becoming part of a bygone era as children are becoming more familiar and comfortable with digital payments. A new survey from TD reveals that nearly seven in 10 (68 per cent) parents say their children are more or just as comfortable using digital payments as handling cash, with their comfort levels increasing as they get older (50 per cent for children ages 4-7 years old and 81 per cent comfort level for children ages 15-17 years old).
But with that come concerns and considerations in this new digital era as eight in ten (80 per cent) parents believe that living in a cashless society can have some negative impacts on young people. Parents worry it is becoming easier for kids to spend money (58 per cent), not realize the consequences of overspending (49 per cent) and become harder to learn the value of money (46 per cent).
“Kids are becoming more and more digitally savvy. Whether it’s accessing an in-app game for a tablet or downloading music from a sharing site online, children are starting at a younger age to understand the concept of making digital purchases by witnessing their parents’ payment habits – often without realizing what it all means,” said Rina DeGrazia, Vice President, Financial Education at TD. “As the payment environment continues to change, it is important to evolve the conversation of how we talk about money to help kids understand the landscape and help ensure they feel financially confident to make smart money decisions throughout life.”
In fact, without these important conversations, Canadian parents are concerned there can be negative impacts for their children, including: not appreciating the value of money (32 per cent), being prone to impulse purchases (29 per cent) and not learning the importance of saving (29 per cent). And when it comes to education, the survey showed that over nine in 10 (91 per cent) Canadian parents feel it is their responsibility to teach their children to use digital payments responsibly.
The survey also found that more than half of Canadian kids have borrowed from mom or dad and have spent more than what they were allowed or expected to spend. What are kids spending this money on? According to the survey, the top categories include: food (63 per cent), in-store shopping (60 per cent), online shopping (46 per cent), and entertainment such as music, movies, and gaming (33 per cent).
“Just as they have for decades, kids continue to ask their parents for money. But what’s different is that today parents may find they aren’t keeping that much cash in their wallets,” continues DeGrazia. “Regardless of how your kids pay to shop at the mall or for online and in-app purchases, it’s more important than ever to help your children keep track of how much they’re spending and to have ongoing conversations about how to manage their money responsibly.”
To help parents feel more confident about teaching their kids about money management and to have ongoing financial conversations, TD offers the following tips:
Age 5 – 6: Introduce your child to money. Whether it’s a board game that involves money management or role-playing games with different types of payment methods, these activities can help kids to understand that payments can take many forms, including coins, bills, debit cards and credit cards.
Age 7 – 8: Take them to the bank to open their first savings account. Encourage children to save some of the money they get as gifts or allowance as this will help build a good savings ethic early in life. Setting up online banking access is a great hands-on approach to teaching your kids about digital money management.
Age 9 – 10: Make the connection about earning money. Talk to your children about your job and what you do to earn an income, showing them how the money is deposited either by cheque or by direct deposit. Start a discussion about some ways they earn money on their own such as doing additional chores like walking the family dog, doing yard work, or being a parents’ helper.
Age 11-12: Discuss your financial goals with your children. Explain that you must create a budget and how to do this as well as how you try to save some of what you earn to achieve those goals. Encourage your kids to participate in decisions about how to spend the family money on things like vacations, holidays and gifts. Empower your kids by having them think through their spending decisions and encourage them to always ask questions about money.
Age 13 – 14: Advise them that they need to keep track of their spending and help them do it. With digital payments and in-app purchases, keeping track of spending can sometimes be tricky. Take the opportunity to sit down with them to review account balances and interest earned on deposits. Tools such as TD MySpend can help teach your child how to keep track of spending and develop healthy spending habits. Also, take the time to introduce the concept of credit. Talk to them about why you have a credit card, show them your credit card bill, explain how interest charges work and discuss the importance of making payments on time and paying the monthly minimum payment, or preferably paying off the balance in full each month.
Age 15 – 17: Once your child understands how credit works, teach them about credit scores and the importance of establishing good credit for the future. Educate them that a good credit score can be achieved by always making the required payment and always on time for all their bills, including credit cards and utility bills, and that establishing these good financial habits can help them when it comes time to getting a student loan, financing a car and helping them qualify for a mortgage when they get older.
About the TD Survey
TD Bank Group commissioned Environics Research Group to conduct an online survey of 1,151 Canadian adults from October 3 – 11, 2018. All respondents were parents of kids 4 – 17 years of age.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (“TD” or the “Bank”). TD is the sixth largest bank in North America by branches and serves more than 25 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America’s Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in TD Ameritrade; and Wholesale Banking, including TD Securities. TD also ranks among the world’s leading online financial services firms, with approximately 12 million active online and mobile customers. TD had CDN$1.3 trillion in assets on July 31, 2018. The Toronto-Dominion Bank trades under the symbol “TD” on the Toronto and New York Stock Exchanges.
SOURCE TD Bank Group