Parenting, children and money

By Vicki Shotbolt, founder and CEO, Parent Zone
 

The average cost of raising a child in the UK is £166,000 for a couple and £220,000 for a lone parent, according to the Child Poverty Action Group’s Cost of a Child report. 

For many parents, this means they live with the constant fear – and for some, the frequent reality – of a deficit. 

The cost of living crisis has meant that many more families are eking out their finances to meet the basic costs of family life. 

Child financial harms

For children, the internet offers easy ways to make, spend and lose money. 

Our research, funded by Nominet as part of a wider programme of work looking at Child Financial Harms, found that almost all – 96% – of children buy things online, either physical goods or digital purchases.

Often, those purchases will be made with the help of an adult but many will be made unaided. This level of digital spending presents a new set of challenges for parents. 

Digital spending can feel more complex than monitoring physical spending for various reasons, one being the frictionless payment methods platforms and services enable us to use. 

The ‘pay now, spot problems later’ nature of this spending can mean that parents only know something has gone wrong when they realise their bank account looks less healthy than expected. 

At the same time, virtual and in-game currencies obfuscate the real cash value of purchases making the teaching of financial literacy more difficult, and the tracking of spending more complex. 

Financial literacy and parents’ struggle

Parents are grappling with these challenges in the context of wider financial literacy gaps. 

According to the UK Strategy for Financial Wellbeing, children, young people and their parents are some of the most in-need groups when it comes to improving financial wellbeing outcomes. Only 48% were in receipt of a meaningful financial education – leaving a large group of families for whom their baseline knowledge is already low. 

The ‘scamwich’ generation of parents worry about both their children and older relatives, feeling responsible for keeping their wider family members safe from scams. 

Beginning to read the room

Against this background, Parent Zone undertook a small number of focus groups to start to understand how parents are feeling. 

The aim was to establish a baseline for support. To meet parents where they are and find out whether there were knowledge gaps and, if so, what shape they are. 

As we continue to map and uncover the nature and scope of child financial harms we recognise the need to make parents part of the process. 

Given 75% of young people say most of their financial understanding and knowledge comes from their parents, there is a clear imperative for any response to child financial harms to be rooted in helping parents themselves understand, prevent and respond. 

What we learned

Over the course of 4 weeks, we spoke with parents in Birmingham, Manchester and London. We also talked to people who had a caring role and or parental responsibility for a child who was not their biological child. 

Whilst the number of parents we were able to include was small, the impact of the discussions was not. Parents articulated a sense of isolation with the issue. They don’t feel supported. They want schools to do more and they have no idea where to get help. 

Amongst a plethora of challenges, the digital nature of money stands out as something that has introduced a level of complexity that parents find difficult to manage. 

Parents described apps from high street food outlets that allow a credit card to be saved to them which in turn facilitates unexpected spending by hungry teens tempted to bypass the ‘check with me first’ rule. 

They talked about in-game spending and the ease with which children, immersed in a game, make purchases. 

“There was a real blur when they were purchasing coins in games. They wouldn’t know whether they were using earned coins or paying money so they would just click onto the next thing and accidentally spend money.” 

More extreme harms, including grooming and identity theft, also emerged as concerns – pointing to both the range and the severity of the issues even a small sample of parents were aware of. 

Nominet’s Digital Youth Index confirms these parental worries through the experiences of young people. The report showed that:

• 35% of young people, including 50% of over-16s, have experienced a scam online
• 14% of young people have experienced identity theft
• 28% of young people say they needed help with scams and fraud.

Parents are neither well equipped nor confident when it comes to child financial harms. They are on the back foot, struggling to prevent harms they don’t always understand. 

“It's the terms and conditions on those things [gaming, skins], all the jargon makes it impossible to try to get a refund for skins.”

Three issues 

Ultimately, the parents in our focus groups pointed to three critical issues when it comes to financial literacy, children and spending.

Digital design choices make unexpected payments exceptionally difficult to avoid. These included games consoles that require a credit card and subscription products that make cancellation a seemingly impossible challenge.

Knowledge gaps that make conversations about money less meaningful. These gaps include an understanding of where money is coming from, particularly if it has been won, gifted or earned online. Limited knowledge of the digital activities a child is undertaking that might involve money or money-like transfers also forms part of this problem.

A burden of responsibility that is too great. Parents accept their responsibilities and want to teach their children good financial skills, but they don’t feel able to do that without support. 

What’s made clear is that preventing child financial harms will require a system-level response. Equally clear is that parents are the front line of that response. 

As we continue to understand the scale and nature of child financial harms – and exploitation – we are starting to consider how to build the defences and protections needed.