Cash allowances started missing the mark decades ago. Teaching kids about money only using cash is definitely out-of-date for today’s kids. Using a no-cash allowance is a successful strategy.
Now we do more cashless spending than 10 years ago. By the time your 7-year-old is getting ready to graduate from high school, we will be doing even more cashless spending.
If you are only teaching your kids about money in terms of coins and bills, you are doing them a disservice. — Ted Rossman, CreditCards.com
Cash or no-cash?
Not having access to cash, both real and play money, does make it harder to teach younger kids about money and money management. — Laura Levine, president and CEO of the JumpStart Coalition for Personal Financial Literacy Read article
The reality is that kids learn what they see. They see very little cash. Today’s kids see card swiping, phone tapping and keyboard clicking. Cash is playing a lesser role at point-of-purchase whether it be in a store, at home, or in the backyard.
My kids started learning to manage money as a number when they were in pre-school. I wasn’t a cash person. My kids saw credit card swiping and check writing. Okay, writing checks places me in ancient history.
Even Monopoly® went cashless
Removing physical Monopoly money reduces the educational benefit of the game by glossing over the important task of learning to manage and count your money. — Nicole Strbich, director of financial planning at Buckingham Advisors in Dayton, Ohio.
Really? Kids do not see parents counting money in the bank! More likely, they see parents squinting at a balance on their phone, computer, or printed statement.
Kids are adults in training
Kids want to harness the power of money just like adults. Agreed, young kids can’t swipe, tap, or keyboard. But they can make decisions that mean something to them.
Even before my kids started kindergarten, they didn’t care if they had cash in hand or money in their account. All they really wanted was to know how much spending power they had that day.
The challenge for today’s parents is teaching kids to manage money they can’t see or touch. Cash does not offer a real-world experience and our kids know it. A no-cash strategy is successful and teaches kids about money the way we use it today.
Easy solution? The No-Cash Allowance
Children from pre-school through high school can practice concepts of debit card, ATMs, electronic transfers and credit transactions using their own money. A no-cash system creates a hands-on money management experience that is similar to that of an adult.
Kids are responsible for keeping track of their own money so the system will not break down. And parents won’t need an app to provide the real-life financial education at home.