Piggy banks are cash only. We do love our piggy banks. They are cute, make great gifts, and we think they teach our kids about money.

However, in today’s world cash is diminishing in importance. Yet we restrict our children’s money management experience by giving them cash and piggy banks.

No matter what: piggy banks are cash only

As parents we like those piggy bank with chambers labeled: save, invest, donate, and spend. We think we encourage sound financial habits in our children. Do you know of many adults who receive money and divide all of it into different categories? Do you?

We are training our children to divide money arbitrarily. They are not working for their money as adults so the money is like a gift to them. Dividing the money according to our expectations will not help them transition to the adult world of money management.

Cash only vs cashless transactions

Children need to learn through experience that money is not only something they can see and hold. Money can be coin and paper currency. Money can be a plastic card. Or, money can be simply a number on a computer screen that can be transmitted anywhere in the world.

In fact, all these forms of digital money are the type of money that your children will manage as adults. Expect that new money forms or processes will show up in their future as well.

Today’s debit card is yesterday’s cash

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–Transferring a number into cash

• Check–Written notice to transfer a number from your account to another

• Debit Card–Swiping card to transfer the money as a number from your account to the store

• Electronic Deposits–Instructing your bank to transfer money to your account as a number

• Electronic Withdrawals–Give permission to transfer money to you as a number

Talking money with kids

Explain to your children how you spend and receive money in these different ways without using cash. Help them understand that your put the money in the bank so you can use an ATM, debit card, write a check, or transfer money electronically.

As parents we continue to increasing our use of cashless transactions. As parents we can help our kids learn the new rules of the money game. When we realize that piggy banks are cash only, we can better prepare our kids to manage money that is not cash.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school.