How to Teach Kids About Money They Can't Touch
This generation is unlike any before it in many ways, one of which is currency. First-world countries are on the precipice of becoming cashless societies (let's not debate if that's good or bad, we just know it IS). So when money is unseen, isn't touched and doesn't transfer between hands, how do our kids grasp such an important but (now) abstract concept?
My kids have over $300 each in their bank accounts. Somehow, years ago, I was suckered into giving them an allowance. It has always been an automatic weekly transfer, mostly because I would forget otherwise. But this is a problem because my kids forget about it. And it's not "tied" to anything of substance in their lives. I tell them they receive $4 every week and in return all we ask is that they do their part around our house. They help with clearing dishes, make their school lunches (yes I know, this is brilliant), put away their clothes, et cetera. So now, years later I haven't increased their weekly allowance but $16/month seems fine to me. Especially since it means absolutely nothing to them.
However, the $36 dollars in cash and change my older daughter has in her American Girl Doll suitcase is pure GOLD. She could care less about the fake, electronic money.
So how do I teach my kids about money? I went on an Internet tear in search of the answer.
- Studies show that starting with cash in the tangible form is good for young kids. They're less likely to want to part with it, and that hopefully instills buying behaviors that carry into their lives. They learn what it's like to have regret when they buy a cheap plastic toy that breaks after an hour of playing with it. They learn what it's like to save up and buy that Big Thing they've been wanting (and then to hand over the money).
- Kids need to interact with money online, in their bank accounts. I've been hesitate (resistant?) to allow my children to browse, click and study their online accounts. But why? Let's be honest, they're savvier than I am when it comes to devices and figuring out new electronic / online games and toys. And seeing is believing. Sit with them and walk them through their savings account, whether it's on a computer screen or via an app. Let them see the deposits, how it all pools into one number and explain what Interest is. And don't do this once. Make it a habit - at least twice a month to get them in the habit of thinking about it.
- When they want to buy things, have THEM buy it. Sit with them to take a look at their online account. They can make the decision after all - it's their money. It's empowering. And if they're buying an item online, they should sit with you through the entire transaction of buying the item and seeing the result in their bank account (even if it's just transferring that money into your account).
- Explain to them the plus-side to cashless currency. Namely that they can't lose it. Dollar bills can disappear out of a pocket, change can be dropped. But if it's in an account, it's secure (knock wood).
- Of course there are many apps for kids on using money. One site I've learned about teaches kids a saving method we've all likely heard of: ThreeJars.com. The "Save, Spend, Share" method teaches kids to responsibly manage and think of their money, while carefully considering how best to divide and use it. And teaching them about charitable giving from a young age (with parents' guidance, of course), is invaluable. Pun intended.
- Finally, a highly regarded NYT best seller that helps parents raise financially responsible and educated kids:
It's a start. And it's never too early, or late, to educate our kids about money. If you have any ideas or experience, please share here in the comments section!