The cost of invisible money
More and more kids are falling into the debt trap as the result of shopping online. As a parent, you may be tempted to ban them from shopping online at all. When children spend their own cash, they feel completely different about costs – and may think twice before buying something. They can lose their feel for the value of money when shopping online. But shopping online is ever more relevant, and kids today take it for granted. Accompany your child as they take their first steps online. Your guidance can have a longer lasting impact than any prohibition.
Talk to them about how to order an item and pay for it on account. They should also learn about returning items. Explain to your child that it harms the environment if they constantly have parcels shipped to them that they may send back. Before you order, check their account balance or how much they have in their piggy bank together with them. Ask them whether they even have enough money to pay for what they want to buy.
Pay bills on time
Ensure that you explain to your child how important it is to pay bills on time. Take care of the payment together the first time your child buys something online. Tell them that they will typically have to pay reminder fees if an invoice is not paid on time and that these reminders can be expensive. It is important that you “only” guide your child in this process and do not pay their bills – unless you have both already agreed to do so before the purchase. If your child is unable to pay for the items, they will have to return them.
Prepaid card instead of ordering on account
Discuss with your child whether a prepaid card, i.e., a kind of credit card you can top up with a specific amount, would be easier and more useful than paying against an invoice. For example, you could agree on a certain amount and transfer it to their prepaid card every six months or annually. They can then use this card to shop online. If the card is empty, they can’t shop anymore and the fun is over. In this way, they can avoid reminders and the associated fees. If your child should have to return some item, the amount already paid will be credited to the card.
This will teach them learn to live within a set budget. Of course, this money can be part of your child’s regular pocket money or allowance. It does not need to be something extra the parents pay.
Are minors even allowed to shop online?
Legally speaking, young people under the age of 18 are not allowed to enter into a contract without the consent of their parents, though this is hard to control. However, there is one exception: If they earn their own income from a part-time job or are given pocket money, young-people capable of making their own decisions can independently conclude a contract. Parental consent is not required.
In a nutshell
- Join your child when they learn to shop online for the first time.
- Explain to your child how to pay bills and alert them to possible reminder fees. But don’t pay their bills.
- Goods that can’t be paid must be sent back.
- The Jugendlohn works well as a limit on the budget for offline and online shopping.
- At most, a prepaid card helps keep track of spending and is better suited than ordering against an invoice.
- To earn pocket money, minors are allowed to enter into sales contracts, both on the internet and in a store.
- Talk to your children. As a rule, outright prohibition will only lead them to buying things in secret.
UBS’s educational principles
This article was written in collaboration with educator Marianne Heller, who has years of experience in teaching financial education and debt prevention programs for children and young people.