5 Ways To Teach Your Kids About Money In A Cashless World

In a world where you can wave your phone at a terminal, swipe a bit of plastic to pay or order online, it’s easy to forget the actual value of money.

Transactions are more convenient, streamlined and invisible than ever before and, unfortunately, the nature of modern shopping is creating a knowledge gap in the next generation.

With fewer opportunities to handle cash, children are missing out on a key life skill - understanding that things cost money, money is limited, wants need to be balanced with needs and the present needs to be balanced with the future.

Financial illiteracy is not inevitable and I’ll break down some strategies you can use your teach your kids about money. Everything from cash pocket money to free-to-play online games.

The Impact of a Cashless Society

Cashless transactions have become second nature to us. And whilst these seamless buying experiences have made managing our money easier, it’s inadvertently leaving kids out of the equation.

Kids see us tapping our phones, swiping bits of plastic and seeing the magical Amazon fairy arrive at the door. But they rarely see physical money changing hands and that can create a sense of disconnect.

When you use cash, there’s that tactile, visual process that shows how much is being spent. Your kids can physically see bills and coins disappear from your hand in exchange for the items you’re buying, reinforcing the idea that money is finite.

What Happens When Kids Don't Understand Money

A lack of exposure to money has created a generation of kids who struggle with financial literacy. Several issues can arise from this:

No Real Sense of Cost

With no cash changing hands, kids can have a skewed perception of how much things cost. Since they’re never involved in the buying process, the concept of budgeting or saving can become alien.

They might not understand that a new toy, snack or video game is part of a broader budget where those wants must be balanced with bills, food, heating and other essentials.

Impulse Spending

Since they don’t see the consequence of spending, they might become prone to impulse buying. An issue that might come back to haunt them as they get older and they gain access to their own money.

With credit cards and Apple Pay, it becomes easy to make a purchase without thinking. Delayed gratification is key to financial responsibility and it’s a skill that needs to be learned. They’ll need it if they want to buy a car, a house or retire.

A Disconnection From Earning

When kids don’t see money, they become less aware of the effort that goes into it. Sure, they might grasp that their mum or dad appear exhausted from time-to-time, but they might not make that connection between work and money.

Kids need to understand that connection and they need to appreciate that their parents are sacrificing their time to get that money in the first place.

5 Ways To Teach Your Kids About Money

Digital payments, online shopping, swiping and tapping are here to stay. So what to do? I think there’s a balance to be made here.

1. Use Cash For Pocket Money

I won’t linger on this point as it’s the obvious one. Go back to good old-fashioned cash pocket money.

Instead of buying your kids a toy, pay your kids for chores in cash. If they want something, they need to hand over the cash themselves. If they want something that’s more expensive, they’ll need to save up.

Also, when you’re out shopping with your children, use cash yourself from time-to-time. Seeing money exchanged for goods can help them grasp that there’s an exchange going on, that buying is not a one-way street.

Allow your kids to handle money for themselves and count out the change.

2. Introduce Play-Based Learning

Hand your child an iPad these days and it’s like they’ve been using them since they were born. Screens and digital games are 2nd nature to a lot of them.

And games can be a fantastic way to teach your kids important lessons in a fun, non-intimidating way. Play a free online game like ‘Grocery Cashier’ to help bring the gap between education and fun.

In this game, kids take on the role of the cashier ringing up food, calculating change, managing cash and other transactions, like gift card payments.

It’s an interactive way for children to become familiar with counting money and it helps them understand that some items cost more than others. It also helps to teach basic math skills like addition and subtraction.

What makes a game like this particularly effective is that it engages kids in a real-world scenario that they’re already familiar with - shopping.

By letting them play the role of cashier, they begin to understand how each item has a value and how money needs to be exchanged for all the items at once.

It’s a safe environment where your child can make a mistake and learn without the stress of handling cash in a shop. A game like this is ideal for parents who want to educate their kids about money in a way that feels fun.

3. Set Up a Bank Account For Your Child

Whilst cash pocket money is good, they will need to grasp digital money too.

Consider setting up a bank account for your child where they can deposit the cash they’ve earned from chores. Certain banks have coin-counting machines where kids could deposit their chore money straight into their bank account.

Encourage them to check their balance and consider issuing them a weekly statement to show how much they’ve earned, spent and saved.

4. Talk About Prices During Shopping Trips

When you’re shopping with your kids, involve them in the purchasing decisions. Talk about what different items cost, why you might choose one over another and what you’re factoring in to your decision.

Discussing money openly with your kids can help them to understand that it‘s limited and that you need to prioritise when you’re budgeting.

5. Encourage Entrepreneurialism

The classic. Get them to contribute to bake sales, do chores for you or your neighbours in return for cash.

This will help them understand that they need to earn the money they spend and that there’s a relationship between effort and reward. It also might make them stop and think before they buy.

We're In The Digital Future and There's No Going Back

We can’t - and shouldn’t - remove digital payments from our lives. They make life more convenient and, for many, it’s an essential.

However, it is crucial to balance the convenience of the cashless society with hands-on money lessons. The strategies I’ve outlined above, like giving them cash pocket money and playing games like ‘Grocery Cashier’, can help to solve the problem.

Ultimately, the goal is to raise children who are financially literate and understand the value of money in an increasingly digital world. By using games, cash and by talking about money in the open, you can install good financial habits early on.

Let’s not let the magical beep of Apple Pay be their sole financial experience.