All posts by Lynne L. Finch

“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.

Piggy Banks Are Not Keeping Track of Money Like ATMs

Piggy banks don't print receipts.
Piggy banks don’t print receipts.

Does your child’s piggy bank print out a receipt? Then how does your child now how much money is left? This brings us to another problem with a piggy bank, keeping track of money.

The traditional piggy bank counting method is to dump out the money and count it. Some piggy banks have counters for money going in but don’t subtract money going out.  At some point a kid will just have to get his hands on the cash to count it. Unfortunately, instead of sticking to counting, something about touching and counting money makes kids want to spend, right now!

With all this counting and touching a child is not learning anything about how to understand a bank account balance like you do. When your ATM prints a receipt do your kids know that the receipt tells you how much money you have left in that account?  Do you ever physically count the money in your bank account?

When you swipe your ATM card you are withdrawing money that you previously deposited. This is not new money. Most of these deposits were electronic transfers or automated deposits from other accounts such as your employment. Like so many of our financial transactions these deposits are money that we usually never see or touch. Does your child ever see you put money into the ATM?

So, what’s the difference between an ATM and a piggy bank? It is accountability. The bank dispensing your cash keeps up-to-date records of your balance. A piggy bank, even one with a counter, can’t subtract withdrawals and adjust the total.

Part of the money management experience for your kids is learning to keep track of their money like they will have to as adults. By having to record each transaction in a home account, your child learns that money is a number that either makes the balance bigger or makes it smaller. A child learns through repetition.

The No-Cash Allowance Tip #4

Give your kids the responsibility of keeping track of their balance like a bank does with an entry for each transaction.

Your kids can accept the reality that their money is a number. That’s how they will manage their financial resources as adults. Piggy banks can’t show them their balance, but a money management system like The No-Cash Allowance can.

Piggy Banks Ignore Checks

Piggy Banks Ignore Checks
Piggy banks can’t cash checks.

A piggy bank only recognizes cash and doesn’t know what to do with a check. Your child can’t spend a check. This creates another problem with piggy banks. What to do when your child receives a check?

Because piggy banks ignore checks, you, as a parent you have to convert the check into cash. You can:

  1. Take the check to the bank, cash it, then give the money to the child.
  2. Deposit the check in your account, in person at the bank, at the drive-through ATM or using your smart phone. Now you can give the cash to your child, either from your pocket or by withdrawing it from your bank account.

Only after you have processed the check does your child have the cash to put in a piggy bank. In this respect, you are acting as a banker on your child’s behalf.

Throughout this experience, your child sees the process of converting the paper check into cash. Notice that the piggy bank has absolutely no role in this process.

Your children are growing up in a world where money takes many different forms. We now comfortably use e-checks, or electronic checks, to perform the same function as conventional paper checks. We can deposit paper checks using  smart phones without ever going to the bank. Today if you are using mobile depositing what new technology will your children be using in the future?

The No-Cash Allowance Tip #3

Act as your child’s banker. Cash checks written to your child. Direct deposit the amount into their written account in writing.

To help prepare your children for the future, you can set up a system as explained in The No-Cash Allowance. By using a written account-based system (on paper or on a computer) your kids can have hands-on practice managing money they can’t see or touch.