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 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.

Piggy Banks Can’t Teach About Real Banks

Piggy banks can’t teach kids about real banks.

Does your child’s piggy bank teach your children about real banks? Today’s versions provide new features claiming to make them more educational, but they remain storage containers in a cute disguise. A piggy banks teaches kids how to put cash in and take cash out.

Adults don’t manage money using piggy banks

Variations add new wrinkles to the money storage capability. How do any of these help a child learn the skills necessary to manage money as an adult?

The chambered piggy bank offers four choices for adding money, namely save, spend, invest, or donate. Do you divide all your money this way as an adult?

The money counter piggy bank counts coins but not paper money. Most require the child to manually lower the counter to show the new balance after money is taken out. Do you have to physically change the balance of your banking account?

The cough-it-up piggy bank requires the child to press the pig’s snout and tip it forward to release money from the mouth. Do you have to do tricks to get your money from your bank?

Regardless of what the piggy bank looks like or its features, a piggy bank is a storage container for cash.

How does a piggy bank compare to your bank?

If you asked how much money you have, the teller pulls up your account on a computer screen and shows you a number that represents your money. If you log in to your online bank account you see the number that shows your balance.

Your bank processes your money as a number. Your money exists in the bank as number such as $1,234.56 or $63.15 or -$25.33. Only when you make a cash deposit or withdrawal do you actually touch money that is not a number

As parents, we live in a world of virtual money where many transactions in our accounts never exist in the form of physical cash. What we see is money in and money out, number in and number out.

What if, instead of using a piggy bank, you taught your child to keep a written record of his money on paper or on a computer spreadsheet?

With such an approach the very act of spending money requires a child to think through the process of subtracting from the balance thus making the number smaller. When depositing money a child has to think through the process of adding to the balance making the number bigger. With these types of hands-on experiences a child learning by seeing how his choices change the amount of money in the account.

The No-Cash Allowance Tip #2

Record every transaction as a number.

Isn’t this what happens with your bank account? Would not this practice with virtual money be good training for the adult world where your child will have to manage money as a number. Maybe it’s time to realize that piggy banks can’t teach about real banks.