Have you ever noticed an odd purchase on your credit card? Minecraft, Roblox, Runescape? What’s that? Then you remember you let your kid borrow your credit card that one time, as nearly half of parents have done before. On top of that, the same number of parents also say their kids used their credit cards without permission.
The kids’ motivation for using their parents’ credit card? In-app or in-game purchases, according to almost 30% of parents.
Your motivation as a parent? To help your kids make smart money decisions when they’re older.
While in-game marketplaces and life simulations mimic the act of buying, parents risk blurring reality and fantasy for their kids if they don’t pay close enough attention.
Karen Holland, the founder of Gifting Sense, teaches school-aged children the value of money, and more specifically, the vital skill to think before they buy. Credit Canada CEO Bruce Sellery chatted with her on the latest Moolala podcast to learn how to teach kids strong financial habits and maintain that education amidst the rise of virtual currency and in-game shopping.
The situation: kids don’t see cash anymore; they see Amazon orders, credit cards, and in-game currency.
Society isn’t completely cashless yet, but you certainly don’t use it as much as most of us did growing up. You pay for groceries with the “tap” of your credit card, order takeout through apps, and buy home products delivered via Amazon. Instead of kids seeing a cash exchange, they just see an elusive swipe or click before, bam — you purchased a product.
So, what’s the problem? Finance expert Jessica Pelltier puts it nicely in the Washington Post:
“If they never see any type of transaction, they think everything is free in the world.”
Holland concurs on how spending is so “frictionless” today:
“If we went into a store and something was $10, and we only had $5 — we went home empty-handed. What’s happening now is children are really confusing payment methods with how they’re funded.”
Things get even cloudier with online games that mimic real-life spending. Roblox is a wildly popular online platform where kids can play user-created games and make in-game purchases with Robux, for online versions of things you can buy in real-life. For example, you could purchase electronics and clothing for your avatar.
The only problem? Holland reiterates that it’s nowhere near real — yet kids think it is, and many of them crave and prefer this way of spending money:
“If you look at Robux, it’s an in-game currency purchased at a steep discount to the face value. For $30 actual dollars, you can purchase $2,400 worth of Robux — which exacerbates this illusion of a magical world.”
So how do you deal with this?
How to teach kids to think before they buy
Here’s the thing: even though in-game purchases are becoming more of a norm, parents shouldn’t just sit back and allow their kids to blur the lines without interfering. And experts like Holland assert that these in-app games aren’t helping kids understand the value of money — at least, Holland just doesn’t buy it:
“I understand that parents might be thinking to themselves, OK online banking… they’re the way of the world…but what is also observable… is that school-aged children very often have no idea how much money is actually required to make a purchase, nor how much they’re likely to use and appreciate an item or experience before they buy it. In-game purchases and virtual merchandise worsens this dynamic and does not improve it in any way, shape, or form.”
So you have two options. One, you could restrict your kids’ use of online games. This could look like a one-time purchase of a gift card specific to that app, or prohibiting in-game purchases altogether. This might help maintain a clear understanding of what money is and what it isn’t — but ignoring the problem isn’t really sustainable. Plus, kids tend to get resourceful and find ways to sneak around rules anyway.
A better option? Talk to your kids and teach them the vital skill to think before they buy.
1. Explain the difference between dollars and in-game currency
On the platform, you can purchase a Gucci purse for your avatar for $5 Robux. Easy peasy online — whereas in real life, that purchase would cost a kid more than their future monthly pay as a newcomer to the workforce.
Holland recommends having a vital conversation with your kids about this difference before giving them any Robux or online currency.
“There needs to be a conversation exploring the purchasing power of actual dollars versus in-game currencies and how that difference is actually magnified by how in-game prices have no reality grounded on planet earth.”
Pelletier concurs with the importance of verbalizing the value of money to your kids in situations where they can no longer visualize it. This applies to in-game purchases as well as app purchases like Uber Eats or simple credit card transactions.
But even with these conversations, you should still actively ensure you don’t allow your kids to replace real-life money exchanges with game exchanges in their heads.
2. Prioritize real-life money lessons and spending over online purchases
Holland reiterates that in-game simulations of spending will never accurately demonstrate the value of money. They still need something tangible to understand that money is earned from their hard work, not a fictional marketplace.
That’s why Holland recommends prioritizing the traditional allowance and money lessons while positioning games like Roblox as only a small portion of your kids’ interaction with money:
“All parents I come across want to help their children develop productive money personalities (money scripts or personalities). To do that, they really need to create circumstances where spending in-game currency is only a side dish to earning and spending allowance versus the main course. I always prefer spending actual dollars on actual stuff.”
3. Use the DIMS score to teach your kids the value of money
Holland’s novel DIMS score asks a series of questions to kids before making a purchase, like:
- How many times will I use this?
- Will anyone in my family use it too?
- How much does it really cost?
- Does it have a return policy or any warranty?
In other words?
Does It Make Sense (DIMS)?
A score from 1-10 is then generated to help kids understand how likely they are to both experience and appreciate a purchase. And it’s effective. Holland sees the switch firsthand. Once kids realize something isn’t worth buying, they won’t want it anymore. This significantly improves family harmony, reduces waste, and incentivizes kids to continue seeking out more financial knowledge as adults.
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In-game spending and credit cards aren’t going anywhere. But with mindful financial education for kids, parents can correct money misconceptions early on to promote strong financial habits in the future.
But financial education is still a big undertaking even with helpful resources like Gifting Sense’s DIMS score and open communication in the family. Pair that with your own stresses about work, debts, and everything else? It’s okay to need some support.
That’s why Credit Canada’s certified credit counsellors offer 100% free, non-judgemental counselling to thousands of Canadians like yourself. They’ll walk you through budgeting tactics, money management advice, and all the many options you have to get out of debt and back into life. Once you feel confident in your finances, you’ll feel more prepared to support your children in their financial journey.