Today’s adults are using less cash when spending. When not using cash consumers are more frequently using debit cards.
According to a 2013 Federal Reserve Payments Study, the number of debit card payments increased more than any other payment type from 2009 through 2012. What does that say about the likelihood that your kids will use cash when they grow up?
You can give your kids hands-on experience with the concept of cashless spending using their allowance. It’s easier than you think.
What happens when someone uses a debit card? At checkout the debit card takes the place of cash without having to get cash from a bank or ATM. With a single swipe, the account balance is updated faster than digging cash out of pocket or purse.
Here’s how you can give your kids that same experience using their allowance and a pencil. If your child is tracking allowance on paper they can shop with you using a virtual debit card. Think of it as your family bank’s debit card.
The next time you take your child shopping, pay for their purchases with yours. Then have them subtract their purchases from their accounts. Your child just made a debit card purchase.
We did this while our kids were growing up. They had written accounts and could withdraw cash with me acting as banker. But when we shopped they more frequently preferred to shop with the debit card approach.
Using our family debit card was easy and clear for all of us to understand. What was most important to the kids was having the ability to buy stuff, they didn’t care if they were using cash or not.
In fact, most of the time they did not withdraw cash before shopping. Even at a young age cash was irrelevant and unnecessary for my kids.
As parents we can help our children prepare for their adult future by helping them understand how people spend their money. Debit cards are here to stay.
Give your kids a valuable experience with cashless spending by paying for their purchases and having them subtract from their account.
Learning to manage money that can’t be seen or touched is an essential survival skill for our kids. It’s a lesson that you can teach in your own home.
Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children to manage money as a number starting with kids as young as pre-school and continuing through high school.