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The Purchasing Power of Kids Raising informed consumers when the “buy” button is so easy to click

girls using a digital tablet

The Purchasing Power of Kids Raising informed consumers when the “buy” button is so easy to click

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Earlier this year, Apple made news by announcing that it would work with customers to issue refunds for unauthorized purchases made on their iTunes accounts—namely, in-app purchases made by minors (in other words, your kids) without a parent’s consent.

The issue had been a thorn in Apple’s side for a long time and included a settlement with the Federal Trade Commission. But what it brings to mind, for me, is the increasing purchasing power of our children. Today’s technology means kids have access to money, even without an allowance or their own debit or credit cards. If you have a shared family computer or iPad, chances are your kids can download songs, buy apps and even place orders on websites that save your information, like Amazon—all on your dime.

So how do you educate them to be informed consumers when it’s no longer as simple as having them divide their pennies and dollars between piggy banks for saving, spending and giving? Here are a few tips:

Remember that you still hold the reins. Sure, your kids may have access to a family computer. But that doesn’t mean they should have access to your wallet, says Susan Beacham, an expert on kids and money and founder of Money Savvy Generation. “Just like every other critical lesson we teach our children—stranger danger, saying “please” and “thank you”—we need to teach them that the family computer is like mom’s purse or dad’s wallet. It’s not meant to be used unless permission is given.” It wouldn’t be appropriate for your kids to go into your wallet and pull out your credit card without asking you, and so the same rules should apply to all of your virtual accounts.

Understand their perspective. Children, in general, don’t deal with abstract concepts very well, and the idea of spending on a computer, without having to hand money across a counter or even plug in credit card digits, is very abstract. (Adults, by the way, have the same problem, which is why online retailers have worked hard to make customer transitions as quick and easy as possible.) So make the rules, and the process of spending, as concrete as possible. That may mean taping a list of rules to the side of the computer, says Beacham. Or it may mean having your children physically hand you dollars from their allowance if they want to purchase something under your account, says Vicki Hoefle, a parent educator and the author of Duct Tape Parenting: A Less Is More Approach to Raising Respectful, Responsible and Resilient Kids. “Explain to them, if you want to buy this, and you need to use my iTunes account to do it, show me the money, then give me the money. That way, there is still that connection, and they learn how much is really at stake. Otherwise, it’s too easy to hit the “buy” button with no connection to what that really means.”

Give an allowance. Hoefle and I share an approach when it comes to allowances: Children should have one, and the money should be used to pay for things for which you as the parent will no longer foot the bill. father giving allowance to kidsSo you slide the money across the table every week, and then when you’re at the store and your son or daughter asks for something, you respond very simply: “Did you bring your money?” If they didn’t—and at the start, they likely won’t—they can’t buy it. “From there,” says Hoefle, “it grows. And after about six or seven weeks, the kids might realize that they’ve been buying small things that aren’t lasting. They will start to think about what else they want, and saving begins to pop in. You can talk about how much things cost, and how long it will take them to save the money to make larger purchases.”

Teach them to shop around. Once they decide that they want to make larger purchases that cost more than one weeks’ worth of allowance, and they begin to save, you can talk to them about the importance of shopping around to get the best price. That includes using coupons and discount codes. Because they’re used to making purchases with their own money, they’re going to be much more conscious consumers than they would be otherwise. “Talk to them about when something might go on sale, and how to look for bargains and coupon codes to find the best deal,” says Hoefle. And discuss needs and wants, and the difference between them. Because they’ll have a limited amount of money to spend, they’ll quickly learn how to prioritize and deal with delayed gratification—an important lesson as they grow into adults.

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