As we begin moving towards a cashless society in Singapore, the consciousness of our spending habits as adults are being eroded. As adults, we understand that money spent on our credit cards and online transections are still money being used. But how would the use of electronic money affect our children’s generation?
Convenience Is A Double Edged Sword
The days of kids saving money in their piggy banks are starting to fade away with the proliferation of cashless payment modes.
While we have not entirely shifted towards a cashless society, the convenience of online stores like Amazon and services that use cashless payments like Uber are speeding up such a transition by making cashless payment faster and more convenient.
In fact, a recent study found that the total online expenditure by Singapore consumers is expected to grow by 55% from 2014 to 2017. It is also estimated that mobile commerce would double to a 190% growth rate within the same period.
Because buying items online or using electronic payment methods does not require physical cash, we are more prone to overspending or buying unnecessary goods as we become less conscious of how much we have spent, since we are not able to physically feel our cash leaving our pockets. Instead, we are compelled to spend more because we are using the money from our bank account, which usually stores more money that what we can carry around in our pockets.
The same logic also applies to the usage of credit cards. Ready credit tends to make us spend more. If adults feel this way, children who are used to buying their items online would feel even more compelled to continue shopping away their savings without feeling the pinch that physical money from their piggy banks would normally confer.
The barrier that prevents young people from overspending – physical money, may no longer be there in the future, when money simply because a number you see, rather than actual currency.
Online Shopping Can Cause Overspending
A study conducted by Singapore Polytechnic in 2016 showed that 57.9% of youths shop online due to the privacy that it offers. The survey also found that special online deals, peer influence and social media are other key factors that increase spending among youths.
An even more worrisome finding by insurer AIA in 2016 found that Singaporeans spend 3.7 hours online per day on non-work usage while 6 out of 10 adults admit to being addicted to social networking and the Internet.
The study also reported that the habits of these adults are being passed on to their children – allowing more children to be exposed to online shopping sites
This push towards a cashless society is partially driven by our government. But while the government encourages this for the convenience of everyone and perhaps to increase consumer spending for the improvement of the economy as a whole, personal finances of youths could be affected if the credit facilities to tempt them to overspend are left unchecked.
Parents, Don’t Fret!
As with all lifelong skills, financial literacy and education can be inculcated to children from a young age. The problem with youths these days is that money is too easily accessible and therefore the key point is to limit that accessibility.
One of the best ways to teach your kids is to practice what you preach, and that is to use cash to limit your spending instead of relying on nets, debit and credit cards.
You would find that no matter how many notifications you receive on your mobile device indicating the amount that you have spent, it still does not beat the effectiveness that tangible reminder which physical money provides you with when you have run out of cash for the week.
Another traditional way is to set a monthly allowance for them if you are wiring money into their own personal savings account. You can deposit a constant lump sum amount every month or even a weekly amount to enforce upon your child the maximum amount of money the can spend each week or month. This teaches your child the value of money, and the importance of budgeting.
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