We love piggy banks. Our kids love piggy banks. But piggy banks do not understand today’s almost-cashless society. As a result they do teach money management to kids.
Piggy banks only use cash. Yet our kids are growing up in a world that uses increasing amounts of money that we can’t see or touch. We spend and receive money every day that never exists in the form of cash.
However, we continue to give our kids cash and piggy banks, neither of which prepare out kids to manage money that does not exist as cash.
How to teach money management to kids
Parents need to think outside the constraints of a piggy bank. In doing so they can find many ways to help kids learn to manage money in a real-world setting. Therefore, a guide like The No-Cash Allowance can help parents. As a result, their children can have a hands-on money management experience at home.
Benefits of a no-cash allowance for a child
- Ownership Children want to have the power to control money just like they see adults doing. “This is my money.”
- Responsibility “I have to pay my phone bill this week and remember that my school activity fees are due next week.”
- Decision-making “If I don’t buy that game today I will have enough next week to buy that jacket I want.”
Benefits of a no-cash allowance for a parent
- No more begging for money Your child will know when, what for and how much money he will have.
- No misunderstanding “Yes, Suzy, you did get paid for mowing the lawn. It’s in your account.”
- Money becomes neutral topic When you child has ownership of his funds it becomes easier to talk about money as a separate entity.
- Expenses become real Something as simple as buying school supplies takes on real meaning. When the money comes out of your child’s account, she makes the decision about what to purchase, based on her available resources (account balance).
Parents can help children understand that each money decision affects their total money resource. Kids need to see that there is a bottom line. By setting up a system as explained in my book, The No-Cash Allowance, your kids will learn that managing money is all about making decisions.