Australian tweens and teens are shopping online in secret, spending thousands of dollars without their parents’ knowledge or consent.
A new survey undertaken by Financial Basics Foundation revealed more than half of the 1,000 parents surveyed (54 per cent) have covered the bill for unapproved online spending for mobile phone data (56 per cent), in-game purchases (33 per cent), music (18 per cent) and video streaming (14 per cent) and apps (22 per cent).
“In today’s cashless society, it’s vital parents teach their kids the importance of earning and saving before spending by speaking openly about balancing the household budget,” said Financial Basics CEO Katrina Birch.
These insights echo the findings of new Suncorp research which revealed around 57 per cent of parents don’t talk to their kids about the weekly family budget.
This is cause for concern, with 62 per cent of Australians carrying some form of debt, including 59 per cent with a mortgage and 43 per cent holding ongoing credit card debt.
“Technology makes online shopping easy and accessible, and a simple matter of hitting the buy button on a screen from anywhere at any time, without really understanding the consequences,” Ms Birch said.
Buy now, pay later services have also influenced online shopping, particularly for millennials, with 15 per cent of 18- to 34-year-olds confirming they’re in debt to this new type of credit facility. In contrast, only 6 per cent of 35- to 54-year-olds and 1 per cent of those aged 55+ reported they owed any money to buy now, pay later services.
Technology makes online shopping easy and accessible, and a simple matter of hitting the buy button on a screen from anywhere at any time, without really understanding the consequences.Katrina Birch, CEO, Financial Basics
Other more traditional types of debt for those aged 18 to 34 years old included student loans (44 per cent), mortgages (42 per cent), credit cards (34 per cent) and personal loans (26 per cent).
Suncorp’s Head of Stores and Speciality Banking, Jason Stephens said while buy now, pay later services are convenient users need to be mindful of how they work and use them responsibly to avoid late fees and administration charges.
“Buy now, pay later shopping is appealing, but it’s also very easy to get into debt which can then be a struggle to pay off, so these services must be used wisely. People should be mindful about their spending from the outset and save their money to buy things, rather than getting into debt,” Mr Stephens said.
“Further, people need to identify if what they’re purchasing is a need or a want. So, before clicking buy now, ask yourself if the item you’re buying is something you can live without. And if you can, it’s probably not something you need and is more of a want. There’s nothing wrong with wanting things, but it’s best not to get into debt to purchase non-essential items.”
Mr Stephens says if you can’t save money to buy items and must use credit, there are simple steps you can take to ensure you avoid any debt traps.
“Like any expenditure, when using these services people need to stick to a budget. It’s also better to link your debit card to them and use your own money rather than linking a credit card and be sure to set yourself payment reminders to avoid any late fees and charges.”
Involving kids in conversations about family budgeting from a young age is the first step in setting them up for a sound financial future.
“Including children in weekly budgeting conversations helps them to develop an understanding of the value of money. Encouraging them to save their money to buy things, rather than getting into debt will equip them with the skills to make better spending decisions, both online and in store,” concluded Mr Stephens.