Nurturing Youth Financial Literacy in the Onlife World – An Overlooked Digital Literacy Topic

November 16, 2023

CAVET – this article was spawned by the increasing number of youths, and their families, who have been reaching out to us given that they were financially defrauded online. This topic is even more relevant given the upcoming Black Friday events and the new Christmas Season that is now upon us.  

In today’s onlife world where the digital economy is thriving and youth are almost universally connected online, the need for teaching online financial literacy from a young age has never been more crucial in our opinion. Unfortunately, the financial activities of youth in the onlife world have often been overlooked, given the widespread assumption that they have little or no financial agency given their age. However, financial transactions online are playing more and more of a role in the lives of youth, thus why we urge parents and educators to take a more proactive role in educating their children about responsible financial behavior online.

As our world becomes increasingly digitized, youth are also becoming immersed in the online global digital economy. According to Eurostat, 68% of those between the ages of 16 and 74 in Europe bought or ordered products or services online (1) As of January 2022, “55% of Canadians made online retail purchases with their mobile devices and this trend is growing with younger consumers leading the way, with 47% of these shoppers purchasing via digital devices once a week” (2)  MediaSmarts Canada found that 63% of youth between grades 4-11 used their smartphones to shop online, which ranged from 55% (9-11 years) to 70% (14-17 years)(3)

Having presented to over 600,000 youth from across Canada, it is amazing to hear how many of them have a debit card to purchase things online. Yes, parents can get youth their own reloadable prepaid cards (4) or even a youth money management app that they can use to shop online (5) Because of this fact, parents must recognize this as an opportunity to instill responsible money management habits with their child, especially when it comes to preventing online financial risks, scams, and the importance of verifying sources before making online financial purchases. Unfortunately, it’s also a sad reality that some youth will use their money to engage in online gambling (6), pay for online pornography, or to purchase illegal drugs online. (7) We have helped families with all three of these challenges.

With the rise of online scams and deceptive practices, it is important to instill in your child a sense of critical thinking when engaging in the digital economy. As of June 2023, according to the Canadian Anti-Fraud Centre, over 283.5 million dollars has been lost to online fraud. (8) Teach youth to question the legitimacy of websites, offers, and requests for personal information. By developing a healthy skepticism, youth can protect themselves from potential online threats. Whether your child accidentally subscribes to a service, falls victim to a scam, or makes an unintentional purchase, use these situations as teachable moments for learning. Discuss what went wrong, how it can be avoided in the future, and reassure them that mistakes are part of the learning process.

It’s important for parents, caregivers, and educator to know that it’s not just about how youth spend money online, but also how they are making money online through various means such as selling goods, skills, or time. This dual nature of youth online transactions highlights the evolving role of the digital economy in shaping our kiddos financial experiences online. 

As an example, did you know that the business sales of any item made by youth online are considered a “service” by the Canadian Revenue Agency (CRA) and therefore any money made, even if gifted, would be considered taxable income. It doesn’t matter to the CRA if the money was made legally or illegally. In fact, if a youth has made over 30k in one calendar year – yes, there are some youths who do, they would also no longer be GST exempt here in Canada. Although the CRA is likely not aware of the amount of money that is being made by a youth online, they do have a tip line where anyone, like a jealous friend, can anonymously report such activity. Not only can the CRA claim money owed to them but will also add interest on that amount owed where appropriate to do so.

Given that spending online has become a normal part of youth lives, it is important for parents to play an active role in nurturing financial onlife resilience. Equipping youth with the skills to make informed decisions, discern legitimate opportunities from potential scams, and understand the value of money in today’s onlife world has become extremely important. As parents, it is our responsibility to teach money management as a life skill, preparing our children for the opportunities and challenges of the onlife world. 

By fostering financial literacy from a young age, we empower youth to make informed decisions, navigate the digital economy responsibly, safely, securely, and lay the foundation for a financially independent future. This means establishing open communication with your child about their online financial activities is essential. Encourage your child to share their experiences, ask questions, and seek guidance when needed. By fostering a non-judgmental environment, you create a space where your child feels comfortable discussing their financial decisions, successes, and challenges. 

Understanding and nurturing your child’s financial literacy has become an essential parental responsibility in today’s onlife world. The statistics revealing the prevalence of online purchases among youth emphasize the need of taking a proactive approach in imparting responsible financial behavior from an early age. Recognizing the dual nature of online transactions, where youth not only spend money but also make money through various means, underscores the evolving role of the digital economy in shaping your child’s financial experiences.

It’s crucial to take the opportunity to instill responsible money management habits, emphasizing not only spending wisely but also making informed decisions when earning money online. The taxation implications of online business endeavors by youth add a layer of complexity that you, as a parent, need to navigate, reinforcing the importance of financial education in your child’s life.

By nurturing financial resilience in the onlife world, you empower your child to navigate the digital economy securely and responsibly, laying the groundwork for a financially independent future. Establishing open communication, encouraging your child to share experiences, and creating a non-judgmental environment are crucial. In the face of rising online fraud, fostering critical thinking skills becomes paramount, equipping your child to differentiate legitimate opportunities from potential scams.

As you guide your child through the challenges and opportunities of the onlife world, teaching them to learn from their mistakes and developing a resilient mindset are key components in preparing them for a future where financial decisions are intricately woven into the fabric of their onlife world. Use this article to embrace this opportunity to empower your child with the skills they need to make informed decisions to navigate the digital economy responsibly. To do this, we also need to educate ourselves as parents, caregivers, and educators – here are three Canadian resources that can help (9)(10)(11)

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