Academic research has found evidence that tech savvy doesn’t equate to financial literacy, and increasing use of tech could make Canadians feel disconnected from their money. With those findings in mind, the results of a new survey from TD should come as no surprise.
In a poll of over 1,100 Canadian parents conducted by Environics Research for TD, nearly seven in 10 (68%) said their children were at least as comfortable using digital payments as they were handling cash, with older kids tending to be more comfortable.
But 80% also expressed concerns that life in a cashless society could have negative impacts. Aside from worries that kids are finding it easier to spend money (shared by 58% of parents), there were concerns of young people not realizing the consequences of overspending (49%) and not coming to appreciate the value of money as easily (46%).
“[C]hildren 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. “[I] t 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.”
Canadian parents expressed worry over potential negative impacts on children without such conversations, including:
- Not appreciating the value of money (32%)
- Being prone to impulse purchases (29%)
- Not learning the importance of saving (29%)
Over nine in 10 Canadian parents (91%) also agreed it is their job to teach their children to use digital payments responsibly. This is critical as the survey found more than half of Canadian kids have borrowed from their parents and spent more than what they were allowed or expected to. The top spending categories in such cases were:
- Food (63%)
- In-store shopping (60%)
- Online shopping (46%)
- Entertainment such as music, movies, and gaming (33%)
To help their children become responsible with money, TD offered some advice:
- Age 5-6: Introduce the child to the concept of money and the different types of payment methods with board games or role-playing games
- Age 7-8: Take them to the bank to open their first savings account. From there, parents can encourage them to save part of the money they get from gifts and allowances
- Age 9-10: Talk to children about the concept of earning money, how one’s salary goes into their bank account, and how they could earn their own with simple chores or part-time jobs
- Age 11-12: Discuss financial goals with children, and how to make spending and saving decisions, such as creating a budget, that are built around these goals
- Age 13-14: Teach them the importance of monitoring their spending, how to use expense-tracking tools, and how to properly use and manage credit card debt
- Age 15-17: Go over the concept of credit scores, how they can be critical in establishing a good score for their future, and how to maintain a good credit rating
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