How to Teach Kids the Value of Money in the Digital AgeBy Yael Israeli | Fri, 11/06/2020 - 15:02
New online spending habits among kids have prompted parents to reevaluate their approach to managing pocket money with their children. Kids today have almost constant access to the internet and that’s where they like to spend their money – or better yet, their parents’ money.
Kids are moving from cash to online to buy apps, video games, and even order food through Uber Eats. This trend has accelerated during the COVID-19 lockdown since many of these games and apps are also a way for kids to stay connected to their friends. As reported in an article by the Financial Times (FT) published in September, “online pursuits in the form of Roblox and Fortnite topped the pocket money spending charts in the three months from April for spenders aged between 4 and 14.” In the same month, Roblox Corporation told Bloomberg that “two-thirds of all US kids between the ages of 9 and 12 use Roblox, and it’s now played by over a half of all Americans under the age of 16, up one-third from April this year.”
As parents, it's our responsibility to not only adapt on a practical level, but also take advantage of this opportunity and transform our kids’ allowance into a financial education aid they can take forward as they build their lives, especially in these difficult COVID times when kids are mostly at home racking up charges on their parents’ cards. This issue has become an increasingly acute problem for many families, with Mom or Dad letting their kid buy on Roblox or Uber Eats just that one time using their credit or debit card, and before they know it, getting a surprise bill at the end of the month. With cards, it's easy for children not to fully grasp the tangibility of the money they are spending and lose sight of value all together.
Gaming in particular has exacerbated this. Over the last few years, the way in which games make their money has changed significantly. It used to be that a user paid just once for a game and was able to play it. Now, there is a continuous release of additional premium content that can be accessed at yet another cost to the user. Often, these purchases can be disguised in the form of a game's currency, such as RoBux in Roblox or V-bucks in Fortnite. The use of an in-game currency in effect dilutes the value of an item in the purchaser's mind. Players can also earn this currency through playing the game. This further blurs the distinction between real currency and in-game currency, as well as earned versus bought, encouraging players to spend without thinking, which can result in children developing a distorted perception of and relationship to money. That is why it’s important for parents to address this with their children from a young age, to create life-lasting healthy money habits.
Parents now need to adapt and find a way to manage this transition safely by finding an easier way to give their kids digital money and be able monitor their spending while ensuring they develop a healthy relationship to money. That’s why we built Mozper, a debit card designed for kids and managed by parents through a dual-mode app. Mozper gives kids the independence and flexibility of real-life financial experiences while their parents maintain supervision of their activities. The app allows parents to:
- Load money using their bank account, credit or debit card so kids can receive their allowance
- Define spending rules on how their children can use their money
- Create savings goals, both long term and short term
- Assign chores for children to complete and pay them for it
Mozper can assist parents in this journey and also protect kids from more serious dangers. There is only so much trouble a kid can get into with $10 in hand, but online, with access to an adult’s credit card, kids can end up in inappropriate or even perilous situations. Mozper debit cards can never be used for any illicit purchase, such as online gambling or pornography. The purchase of alcohol and tobacco are also blocked automatically. This allows parents to have peace of mind in their transition from cash to online when managing their kid’s money.
The way we relate to money is changing at a fascinating but also challenging pace due to technology and the internet. Parents need to deal with this new reality because isolating kids from these trends will most certainly backfire in their current well-being and in their financial life as adults. It's important to be conscious of this transition from physical money to digital money and understand the implications of this change in behavior. Let's empower this generation by providing access to the purchases they want while keeping a watchful eye, and in the process also building on their financial education.
About the Author
Yael Israeli is an executive with 15 years in investment banking, consulting and entrepreneurial ventures. Today, Yael is the CFO of Mozper and treasurer of Mujeres Brillando, a foundation helping women entrepreneurs develop their businesses. Mozper is where Yael’s professional and personal life experiences converge, addressing issues such as financial education, parenting and childhood development.
About the Company
Mozper is a debit card and app designed for kids and parents in Latin America. We let parents give their kids an allowance and set spending rules so they can't blow it all on video games. Parents can also assign chores and track savings goals. In this way, children get a hands-on, real-world financial education appropriate for the digital era. Just in Brazil and Mexico, more than US$10 billion are given each year in cash in allowances. Mozper is currently available in Mexico.