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Financial Education

Cashback and pocket money: a good plan or just an incentive to spend?

Bloon's opinion

Cashback may seem tempting, especially for young people new to money management. But at Bloon, we believe it introduces a consumer dynamic that doesn't correspond to the principles of sound financial education. By choosing not to include cashback in our offer, we focus on savings and reflection, encouraging young people to develop a responsible relationship with their money.

Clara, 15, is delighted: her bank card has just earned her a small percentage on her latest online purchase. However, this seemingly attractive cashback scheme hides a number of subtleties that young people may not be aware of. Is it really a good deal? Or is it a disguised incentive to spend? Behind the cashback mechanism lie complex commercial strategies that also raise educational questions, particularly for parents keen to pass on healthy financial habits.

How does cashback work?

Cashback consists of reimbursing a percentage of purchases made, often in the order of 1-2%. This amount, though modest, is perceived as a "reward" that encourages users to spend more. Some cashback services even require a paid subscription to activate this option, which further reduces its economic interest. If you pay to receive a discount, the profitability of the measure becomes questionable, especially for young users with limited means.

Cashback also frequently relies on partnerships with third-party companies specializing in the management of these programs. These intermediaries collect detailed information on users' purchasing habits. For parents concerned about the confidentiality of their children's data, this data collection poses a problem: in exchange for a small gain, valuable information is shared with third-party companies.

Spending incentives: a trap for young people

While cashback may seem attractive, it has a subtle influence on consumer habits, especially among teenagers, who may perceive this small discount as a good deal. "I got €1.5 back by buying this item, so it's a good thing I bought it now," thinks Clara. But in reality, these "savings" encourage people to spend more, because the more they buy, the more cashback they earn.

The figures speak for themselves: a University of California study showed that 78% of teenagers are influenced by the prospect of immediate gains, such as discounts or cashback, in their purchasing decisions. This dynamic creates a form of "instant gratification", encouraging impulse purchases to maximize return.

Cashback: a false impression of a good deal?

Cashback can also create a false sense of bargain. For example, when retailers temporarily increase the cashback percentage for specific products, this encourages young people to buy quickly for fear of missing out on the offer. This perception, which specialists call the "fear of missing out" or "FOMO" (Fear Of Missing Out), is particularly strong among young people, influenced by the urgency to take advantage of the apparent bargain.

And yet, most of the time, cashback only encourages additional spending. Statistics published by Youth Marketing Group show that 64% of teenagers admit to feeling pressure to buy when they see a time-limited cashback offer. This feeling pushes young people towards impulse purchases, rather than focusing on well-thought-out financial goals.

Cashback and financial education: a questionable approach

For young people new to money, cashback can blur their perception of the real value of things. By encouraging spending to "earn", this mechanism distorts the understanding of saving and spending. "Cashback should not be perceived as free money," stresses Sarah LefĂšvre, a financial education specialist. "In children and teenagers, it can create a skewed relationship with money, where spending more is justified by getting rewards."

This vision can even distract young people from the objective of sound financial management. "Rather than promoting savings, cashback encourages consumption in order to recoup a tiny percentage," continues LefĂšvre. This dynamic, rather than encouraging responsible management, fuels the temptation to spend on small rewards, at the expense of more meaningful savings objectives.

Why Bloon doesn't offer cashback

Given the potentially harmful effects of cashback on young people's financial habits, Bloon has chosen not to integrate this feature. "Our mission is to promote thoughtful money management," explains Bloon founder Frédéric Guy, "We believe that cashback encourages impulsive spending, which goes against our educational objective."

Instead of seeking to maximize immediate "gains", Bloon prefers to encourage responsible, long-term practices. Thanks to advanced parental control tools and an approach focused on education, Bloon accompanies young people in their first financial steps without offering them incentives to consume.

Tips for educating young people about managing cashback offers

For parents, making children aware of the subtleties of cashback can be essential to a sound financial education. Here are a few tips to prevent cashback from becoming a trap:

  1. Clarify the nature of cashback: Explain to your child that cashback is not a sum "offered" but a mechanism to encourage spending. This understanding can help them better analyze their purchasing choices.
  2. Discuss the impact of paid subscriptions: If the cashback is conditional on a subscription, it may be useful to have the child calculate the total amount he or she will have to spend for the subscription to become profitable. This will help them better understand the real profitability of the offer.
  3. Encourage a reasoned approach: Encourage your child to ask the right questions before making a cashback-motivated purchase. Does he really need the item? Or is he buying just for the cashback?
  4. Value savings over "rewards": Promote the idea that money saved is more valuable than money "earned" through cashback. By directing their spending towards a savings objective, they'll learn the value of a thoughtful purchase.

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