How children and young people learn about money in a digital world

The internet has revolutionised the way that children and young people experience money. More young people than ever are using a debit card, purchasing items online, or using in-game currencies whilst playing online games. From everyday purchases to interacting with banks, digital payment methods are becoming ever more used and accepted.

This rapid digitisation of financial transactions has profound implications for children and young people’s financial education and the way that they understand and learn about money.

The UK Strategy for Financial Wellbeing, coordinated by MaPS, sets out an ambitious goal of 2 million more children and young people receiving a meaningful financial education by 2030. A greater understanding of how the changing digital world influences and affects the way people interact with and understand money is key to informing the delivery of effective financial education to improve digital financial literacy – whether this takes place in the home, in school or in the wider community.  

Our Children and Young People Financial Wellbeing Survey 2022 told us that the shift towards increased digital financial transactions affects the whole family and starts young.

Compared to the 2019 survey, significantly more children and young people aged seven to 17 are getting their pocket money or allowance digitally, i.e. through bank transfer or through a pocket money app.

Over two thirds (68%) of seven year-olds receive their pocket money in cash but less than half (46%) of 11-year-olds do, and by the time children get to 17 only 28% get paid only in cash, while 58% are paid pocket money digitally. 

Whilst 75% of seven to 11-year-olds always or mostly pay for things in cash this falls to 27% of 16 to 17-year-olds.

This shift away from receiving regular cash, particularly amongst older children, is likely to have an influence on how children are choosing to pay for things in shops.

We asked parents and carers about how their child pays for things in shops, such as if they tend to use cash or their own debit card (1). The results show that overall, 57% of children aged seven to 17 ‘always’ or ‘mostly’ use cash.  

The shift towards the use of digital payments is also seen in the proportion of children who are paying for things online such as apps, games or music.

Overall 71% of children aged seven to 17 are paying for things online themselves, rising to 91% of 16 to 17-year-olds.

Of those children who have bought online, 13% ‘always’ buy things online without any adult supervision, 18% do so ‘most of the time’ and 21% ‘some of the time’.

This equates to 52% of children and young people buying things online without adult supervision, at least some of the time.

The survey also highlighted that there has been significant growth since 2016 in both children’s debit cards and their reviewing a bank account online. In 2016, only 42% of children used a debit card, compared to 63% in 2022.

Likewise, only 31% of children were reviewing their bank accounts online in 2016, whereas in 2022 57% were doing so. Alongside this shift towards digital banking services, many children are not undertaking certain activities, for example going into a bank branch.

Even amongst the younger 12 to 15-year-old age group, many are accessing their accounts digitally (as shown in the downloabale 'digital activities done by children with a bank account' graph), suggesting the importance of continuing to develop age-appropriate digital financial tools to help children and young people manage their money well. 

As part of our Children and Young People’s Financial Wellbeing Survey 2022, we asked 14 to 17-year-olds if they thought investing in cryptocurrencies was a safe way to make their money grow.

Whilst only 20% said they thought it was, 40% said they don’t know. Only 40% of 14 to 17-year-olds said it was false to say investing in cryptocurrencies was safe (2). This suggests young people have a great deal of uncertainty around the safety of cryptocurrencies.

There were also some differences between young people; boys were more likely to agree it was safe compared to girls. Young people living in low-income households were more likely to say ‘don’t know’ compared to those in high-income households; and a similar pattern was observed between those living in the most and the least deprived areas. 

We commissioned University of St Andrews Banking and Finance academic Dr Marcel Lukas, and Julia Lukas from the University of Dundee, to conduct a literature review on the topic of digital financial literacy and how digital money impacts children and young people’s financial education.

This research, alongside interviews with experts in the field of financial education, indicated that increased digitisation could have some real benefits for children and young people.

For example, they can be introduced to financial concepts such as savings and interest earlier on, achieve better financial management through the use of digital tools, or might have earning opportunities made available sooner than they otherwise would have. The rise of ‘kidpreneurship’ is something that was highlighted in this review, where children monetise their digital skills and online presence.

However, the literature review also highlighted some significant risks to children and young people, who are spending more time online, often unsupervised.

These risks include exposure to online fraud, cyber security threats, and the normalisation of financial risk-taking through the gamification of digital financial platforms. These risks are corroborated by work that the Child Financial Harms Consortium (led by Parent Zone) are doing in this field, to better understand and address the harms children might face online.

An interesting dynamic has emerged where some parents have less knowledge and understanding of digital platforms than their children, leading to less supervision and increased risk of harm or damaging online practices.

There is a shift towards children and young people consuming more information online more generally, which can be a great way for them to get information, but there are also not always able to discern between what is real and what is fake, and the quality of the content being shown to them.

From this literature review, it is clear that more research needs to be done on the topic of children and young people’s digital financial literacy.

We encourage the funding of research into children and young people’s online financial behaviours, knowledge and attitudes, including how these actions shape their overall understanding of and attitudes to money. This evidence could then be used to inform the design of effective digital financial education interventions, ultimately preparing children and young people for an increasingly digital world.

We recognise that parents and carers need support in order to speak to their children about money confidently, including about digital money.

Whether you’re a parent, carer, or work closely with children, our free and impartial MoneyHelperOpens in a new window guides can help in talking to children about money: 

• How to talk to your children about money.Opens in a new window 
• How to explain digital money to children.Opens in a new window  
• Teaching your child about online scams and in-app purchases.Opens in a new window

We would like to thank Critical Research who conducted the fieldwork for the 2022 Children and Young People’s Financial Wellbeing Survey and helped with the further analysis of the digital trends in the data.

Thank you to Dr Marcel Lukas and Julia Lukas, who conducted the literature review.

(1) The definition of Debit Cards included paying using their mobile phone or smartwatch. 

(2) YP21d (Investing in cryptocurrencies such as Bitcoin is a safe way to make your money grow) Base: All children aged 14-17 years (1,634).

Also see

• Literature Review: The impact of digital money on children and young people’s financial education
• UK Children and Young People’s Financial Wellbeing Survey: Financial Foundations