Introduce your children to digital transactions as early as possible, says Dr Navneet Gupta
After the abrupt and unanticipated decision of demonetising all Rs 500 and Rs 1,000 banknotes, people experienced chaotic situations following a deficit of the new currencies in the market. At that time, consumers were left with fewer options for payments, while a limited number of people were aware of digital transactions. Later, people adopted the process of digital transactions from every sphere, class and sector of society. For those who have been living under a rock for the past five years, a digital transaction is cashless, involving no paper for the completion of the transaction, either purchasing goods from e-commerce websites or booking train tickets through your smartphone app.
With fresh brains, kids are always curious and seem to possess the ability to learn new things more easily than older people. Kids these days use internet services more frequently for various purposes, as compared to previous generation of children who used the internet. It stands to reason that they are familiar with digital transaction platforms. However, there are certain points that should be observed before letting your child make digital transactions.
Security
In the future, digital payments may become the primary form of transaction, therefore it would be in the best interests of your child to expose them to digital payments from the time they are young. Earlier it was a challenging task for parents to keep an eye over the pocket money given to kids. A child carrying cash was more vulnerable to snatchers than anyone else. Moreover, children are not as good at supervising the cash, compared to older individuals, resulting in losing their money at places such as schools, playgrounds, markets, et al. Through digital transactions, it would be easier and safer to keep your child and money safe. It goes without saying that as a parent, you have to instruct your child on the importance of PIN/CVV/OTP and highlight that they never share these with anybody else.
Parental Control
While kids no longer need to carry hard cash with them, eliminating the chances of losing money, you have to keep track of their monetary activities. Parental control is profoundly essential not only to stay aware of the expenditures made by your child but also to stop them from getting addicted to overusing such apps. At an early age, children crave to learn everything that is within their reach. While they may not really understand what is going on, whenever they get to know about a new application on their smartphones they invest their time to learn its nitty-gritties. Teach you children to practise restrain from a young age by incentivising not spending more than what is necessary. This will also serve as a lesson on financial literacy, which might come handy in the future.
Timely Analysis
A regular analysis of the account by parents is very useful to track their child’s spending. This is a simple way to find out whether their kids are spending money on needless things. It may also help the parents in tracking, if your kid gives debt to any colleague, friend or neighbour following any pressure. It is not unnatural for a child to hide the details of any unpaid debts, from their parents. Build a bond with your child where they don’t hesitate to share details concerning money.
Setting limits
You can set a cap on your kid’s weekly or monthly pocket money to let him allocate the amount themselves. It will help them in financial planning from an early age and guide them in managing the money appropriately. If you do not set a limit for spending money, then your kid might not realise its worth, until its too late.
Conclusion
For many reasons, digital transactions are favourable for kids of the new generation over the traditional hard cash, but how they spend it is just as important, if not more. It’s the responsibility of the parents to show them the tips and tricks to manage their resources, especially by being a good example themselves. Don’t forget, children are good imitators — they might not do what you tell them to do, but they will definitely do what they see you do.
(The author is the founder and CEO of YPay, a young fintech start-up focussed on payments for children.)