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:
- Take the check to the bank, cash it, then give the money to the child.
- 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.