Spending habits have shifted significantly over the last decade. High adoption of smartphones, social networking, tablets, and more are several reasons why people make less purchases in physical stores than ever. While you may have participated in this transition, your kids are growing up with online spending as the norm. Amazon, Hulu, Netflix, Ebay, and other services have made it as simple (and affordable) as possible for their customers to make online purchases rather than going to the store. With kids spending more than 1.6 hours a day online according to online safety provider Norton, it is critical that you set ground rules for your children to follow.
- No Purchases without Parental Approval
Regardless of how old your kids are, they should be comfortable talking with you about their online purchases. Setting a rule that they must check with you first for approval gives you an opportunity to verify that the website or app they are using is safe, and the purchase is appropriate. As your kids get older, you can relax this rule to teach your children about trust. For example, you could allow your kids to spend their allowance when they want online, provided they use websites you have pre-authorized.
- Approved Websites & Services
Sit down with your kids and walk them through which websites and services they are allowed to access, and which sites they should not be using. This can be supplemented by parental controls, but not every mobile device or PC has these capabilities or makes it simple to use. A spending card and app like Greenlight can simplify this process through its simple interface while teaching children about good money habits.
- Purchasing Amount Limits
Sit down with your kids and set strict limits on how much money they are allowed to spend online at any given time. Limiting how much your child can spend at one time or each month will significantly reduce the possibility of an unwanted purchase. Link this amount to your child’s allowance because you can review their spending monthly and teach them better money management skills.
- Category Limits
Much like a dollar restriction, select specific categories your kids are allowed to purchase from. For example, you may allow purchases related to gaming, clothes, and music, but restrict purchases to junk food, R-rated movies, and more. Several allowance systems allow you to set up categories for spending which could be used to enforce the restriction further.
- Time Limits
Whether your kids are using cell phones, tablets, or a computer, set specific time limits for how long they can spend on any of the devices. In addition to limiting access, set specific hours that they are allowed to have screen time. Your kids should learn when it is appropriate to use online devices, and occasions when it is not appropriate such as family time. A general rule of thumb is allowing a maximum of one to two hours per day with an online device after they have completed their homework. Establishing a cut off time is also important so your kids don’t impact their sleep schedule.
(photo courtesy © Lucélia Ribeiro cc2.0)
Do you want your kids to be financially stable when they’re adults? Want to avoid having to take-in your wayward son after he’s run out of money, forcing you to shelter him in your basement until he gets back on his feet? Want to make sure your daughter doesn’t waste her entire paycheck on a frivolous, impulse purchase?
If your answer to any of the above questions is “yes,” consider this technique: Have your child look after an imaginary dog for a month.
Why an Imaginary Dog?
When I was in high school, I had a friend named Scott who desperately wanted a dog. His parents were hesitant, worrying about things like, “What if we end up taking care of the dog all the time?” and “Can we afford all the expenses that come with a dog?” But, in a moment of parenting brilliance, Scott’s mom and dad came up with the Imaginary Dog Plan. This plan required Scott to wake up every morning at 6am, walk a leash around his neighborhood, put down an empty food bowl, and then open and close an empty dog crate. Immediately after school, Scott came home and walked that empty leash again, put down the empty food bowl, and spent 30 minutes either vacuuming, dusting, or completing some other household chore as a stand-in for the time he’d have to spend cleaning up after a dog. Additionally, his parents struck a deal requiring him to pay for half of all the expenses that come with having a dog. To prove that he could do this, Scott did extra chores around the house and got a part-time job. By the end of the month, Scott had walked his empty leash 60+ times and had saved $300. By the end of the month, Scott had a real dog.
How an Imaginary Dog Can Help Your Family:
So, how does my friend’s dog apply to you and your family? Simple: the principles Scott’s parents taught him through this exercise are the same principles any kid needs as a foundation for a successful financial life. If your son or daughter wants something, whether it’s seemingly insignificant, like a crazy new pair of socks, or something bigger like a pet or laptop, consider using this technique to help them get what they want while also teaching them the importance of being responsible with their money. Some of the lessons they’ll learn from an exercise like this are:
- If you want something, you need to work for it
- You need to consider all the responsibilities attached to making a purchase
- You need to be fully prepared, financially and physically (with your time, etc.) before making a purchase
- You should give yourself time before making a big purchase to make sure you really want that particular thing
- Often, making purchases (especially big ones) requires some sort of sacrifice, so you need to ask yourself, “Is it worth it?”
Obviously, if you decide to try this with your kids, the situations will be different, and you’ll need to adapt strategies. It wouldn’t make any sense for your daughter to walk a leash every day to prove that she’s responsible enough to buy a laptop. Instead, you may start by asking her to save a certain amount of money each week. Then, have her to carry around a fragile place-holder (picture frames, perhaps), proving that she’ll be careful with something as breakable as a laptop. You could even have her do research on how to fix common laptop problems, making sure she’ll know what to do if it won’t turn on one day, or if it gets a virus.
Whatever way you apply this to you and your child’s life, just be sure to remember the main point: If you prepare your kids now to be responsible, both financially and personally, they are much more likely to continue these practices as adults. Try it today, and hopefully you’ll still have your basement to yourself once your kids grow up!