Teaching Kids Smart Online Money Habits

It’s rare that money jingles in our pocket or gets hidden between the mattresses for a rainy day. The way you grew up—and the tangible presence of money—isn’t the same experience for your 21st century cyber kid.

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As digital natives, our kids have grown up with an entirely different view of money: Money is plastic, money is Pay Pal, and money is an invisible monthly charge that automatically comes out of mom or dad’s account.

Not only is their understanding of the value of a dollar askew, their vulnerability to treating it casually online—and being victimized by scams and identity theft—is a real risk.

The Internet Crime Complaint Center (IC3), a joint venture of the FBI and the National White Collar Crime Center, in 2007 found:

  • Online auction fraud was the most reported type of fraud and accounted for 44.9% of consumers’ complaints
  • Non-delivered merchandise and/or payment made up 19.0% of complaints
  • Check fraud represented 4.9% of complaints
  • About 70% of the fraud victims were scammed through www (e.g. online auctions)
  • About 30% of the victims were scammed by emails (phishing)

Raising cyber savvy, money conscious kids is possible with some extra knowledge and consistency.

Three things to keep in mind on the parenting front: First, keep communication open and get overly insistent (borderline annoying) in teaching your kids to be protective in giving out personal information when making purchases online. Second, to reinforce the value of money (physically), require that your kids earn the money to pay you back in cash for online transactions that you okay on your credit card. Have them physically count the cash back to you and understand what it takes to earn $10. Third, sit with your child and run through several transactions. Coach them along the way. And fourth, have clear consequences in place if your child or teen abuses your credit card or doesn’t follow the privacy guidelines you’ve put in place.

Here are tips on how to safely shop online:*

  • Check out the vendor. Verify vendor legitimacy by checking physical addresses of shops and vendors when purchasing.
  • Keep credit card info guarded. Teach your kids not to give out credit card information in “exchange” for some cool offer or a discount.
  • Secure your browser. Be sure your browser is secure and has the most up-to-date encryption capabilities by using the latest version available from the manufacturer. 
  • Avoid public wifi. Don’t assume that public “hot spots” are secure. Unless you can verify that a hot spot has strong security measures in place, you shouldn’t send sensitive information like your credit card number over that network.
  • Avoid “free” offers. Teach your kids to avoid free screen savers, e-cards, or other seasonal downloads that could carry dangerous viruses. Keep your anti-virus and anti-spyware software current along with your firewall.
  • Know how to file a complaint for suspected fraud with the Federal Trade Commission.

*Source: Federal Trade Commission

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