Piggy Banks are Not ATMs

Reason Number 3: Why Piggy Banks Don’t Teach Your Kids Money Management

Somewhere right now a parent is saying, “We can’t buy that because we don’t have enough money.” No problem thinks the child, who helpfully suggests, “Then let’s go to the machine and get some.” To a kid an ATM is like a magical piggy bank.

Automated Teller Machines (ATMs) have been around since 1969 and are as indispensable to most people as cell phones and e-mail. So why do kids think that ATMs just hand out money?

Kids believe what they see. You put a card in the machine, punch some buttons and get cash. Do they see you put money into the machine? No.

The ATM is simply giving back money you already deposited. Most of these deposits were electronic transfers, automated deposits, or maybe the occasional check, sometimes cash. Usually your deposits are money that can’t be seen or touched. It is this virtual money that shows up as a number in your account.

Kids believe what they see. If they see or hear a lot of coins in their piggy bank they think they have a lot of money. They don’t really know how much money they have unless they physically count it.

Do your kids see you go the bank and actually count all the money in your account? No. What the ATM does is print out a receipt. Do your kids know that the number on the receipt tells you how much money you have in that account? Probably not.

So, what’s the biggest 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 learning experience for your kids is learning to keep track of their money like they will have to as adults. A child learns through repetition. 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.

If kids believe what they see shouldn’t their money experience start moving them down this path to understanding that money is simply a number? Piggy banks can’t do this, but a money management system like the no-cash allowance can.

Your kids need to start to see that their money is a number because that’s how they will be managing their financial resources as adults. Kids believe what they see.

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