Why are we using cash and piggy banks to teach our children how to manage money? If the answer is,
“So they will be able to manage money as adults,” then why do we give them something they won’t use as adults?
Piggy banks are cash only.
In a world where cash is diminishing in importance we restrict our children’s money management experience by instructing them to store cash in a container. When we divide the piggy bank into chambers labeled: save, invest, donate, spend, we think we are encouraging sound financial habits in our children.
Do you know of any adult who receives money divides all of it into different categories? By training our children to divide money arbitrarily according to our expectations we are not helping them transition to the adult world of money management where most of their money is used to pay the bills.
Not only will our children have to pay their bills as adults, they will not be paying with cash. This cash-only approach to money management in a cashless society is like giving children a Model T and a road map from 1920 to learn how to drive a car.
Children need to learn through experience that money is not just cash. In the broader sense, money is a medium of exchange and trust; money represents an amount of spending power. Money has changed form over the centuries and will continue to do so.
Money can be coin and paper currency, money can be a plastic card, money can be simply a number on your computer screen that can be transmitted anywhere in the world. In fact, all these forms of virtual money are the type of money that your children will manage as adults, as well as any new money wrinkles that show up in the future.
According to research by TowerGroup, a subsidiary of MasterCard Worldwide, debit cards are taking the place of pocket cash. Already 72 percent of salaried workers have their pay sent directly to bank accounts making debit cards a convenient way to spend without having to withdraw cash from an ATM
In dollar terms, debit cards are used for more than 50 percent of all non-cash sales. Many of these are small purchases typically paid for with pocket change, such as a cup of coffee, fast food, and gasoline.
Where is the cash? Much of today’s money management is done without using cash at all. Look at your recent bank statement and see how many transactions take place without using any cash at all.
- ATM–When you access an ATM you are transferring a number into cash.
- Check–When you write a check you are giving your bank written notice to transfer a number from your account to another.
- Debit Card–You use a debit card spending at point of purchase like cash but by swiping your card to transfer the money as a number from your account to the store.
- Electronic Deposits–When you set up automatic payments you are instructing your bank to transfer money to another account as a number
- Electronic Withdrawals–When you receive automatic deposits you give permission to another account to transfer money to you as a number.
The No-Cash Allowance Tip #1
Explain to your children how you spend and receive money without using cash.
As parents we use an increasing amount of cashless transactions. As parents we can help our kids learn the new rules of the money game. When we start thinking outside the contraint of a cash-only piggy bank we can better prepare our kids to manage money that is not cash.Follow me on social media: