How Do We Teach Kids About Money When They Never See Cash?

Has money become too abstract to teach?

When I was younger, I spent ages trying to teach my little sister the concept of change given at a register. “If you give them money, why do they give you money back?” she would ask with her preschool lisp.

Twenty years later, money seems much simpler to my child. To buy an item, you merely swipe your card and it’s done. My 3-year-old sees cash so rarely that I doubt she would even recognize paper bills as something that she could use to pay.

Teaching kids about money has always been complicated, and in a world where financial transactions are more likely to be handled with a click or a swipe than by handing over cash or writing a check, money can become even more abstract.

“A cashless world presents both challenges and opportunities for kids’ financial literacy,” says Jennifer E. Myers, a certified financial planner at SageVest Wealth Management in McLean, Va.

There’s no denying that we live in an economy where carrying cash is no longer the norm, so parents must learn to teach their children about money in the digital age. We spoke with experts and parents about how they teach kids about money in 2017. Here’s what they said.

Help Older Kids Use Technology to Manage Their Money

Today we have a wealth of financial information at our fingertips. Use that to your advantage when teaching preteens and teens about money.

“Today’s electronic world opens doors to financial education for older kids, particularly when it comes to the ever-important topic of budgeting,” Myers says. “Being able to monitor your account balance and spending patterns through online banking and budgeting software is a new advent available to today’s younger generation.”

Leighann Marquiss, from Pittsburgh, Pa., encourages her four kids to use online banking to familiarize themselves with their spending habits and important financial concepts like interest.

“They are able to pull up their accounts on the banking app (on their father’s phone) and see their balance, any interest earned, and any spending transactions,” she says. “They like having the real-time information and being able to spend money without carrying cash — and possibly losing it.”

For Younger Kids, Start With Cash

Studies have shown that even adults are more mindful of their spending when they’re using cash, so it’s no surprise that using paper bills is the perfect way to start teaching kids about money.

“Holding and transacting cold hard cash remains important for kids, particularly younger kids,” Myers says.

Many parents start by giving their children a small cash allowance, which helps solidify the concept of money for preschoolers and other young kids.

“I think it’s important to show younger children cash to get an understanding about money and help them visually see what they save and earn,” Marquiss notes.

Jennifer Bright Reich, mom of two from Allentown, Pa., hopes that her children will always remember what they learned from using cash.

“I think it’s quite possible we’ll be a cashless society someday, maybe even soon,” she says. “But I think we’ll still need to use a cash mentality — spending what we have earned, not relying on too much credit.”

There’s An App For That

As financial transactions are increasingly done online, it’s no surprise that there’s been a rise in apps that teach children how to save and budget, no matter what their ages. Finding one that engages your child can help make learning about money exciting.

“Find one that’s fun and give it a try,” says Laura R. Knolle, vice president at EP Wealth Advisors, Inc. in Lafayette, Calif.

PiggyBot and Bankaroo are virtual piggy bank apps that allow kids to keep track of how much money they’ve stored. (Meanwhile, mom and dad hold on to the actual funds).

Allowance Manager allows parents to control allowances, while the kids get an Allowance Card that operates on the Visa network and allows them to make purchases similar to swiping a debit card. ThreeJars.com teaches kids to divide their money into three categories: save, spend and share.

Allow Modern Spending Habits

Kids used to revel in taking their allowance money to the store, but today many kids want to make purchases online. That’s an important part of using money in today’s digital world.

Helen Okoye, of St. Louis, Mo., realized that she needed to teach her 4-year-old daughter about money when she frequently asked to purchase and download new games on her tablet.

“She loved to download games over the past two years, especially paid games, and we realized we couldn’t keep up with that,” Okoye says. “So we taught her that money had to be earned and that mommy and daddy had to work to earn it, and it takes time.”

Her daughter can earn money for good behavior or by completing chores. Okoye keeps track of her daughter’s money, and the girl asks for cash occasionally in order to buy something at the store or make an offering at church. She’s also learned to recognize the dollar sign and is comfortable with understanding money in its digital form in order to make purchases on her tablet.

“It’s a different strategy from piggy banking, but it works,” Okoye says.

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