Kids learning about money in the digital age
The world has changed. The single most significant development is that cash is becoming increasingly scarce, with the COVID-19 pandemic accelerating its downfall. Finances are becoming increasingly virtual, with the majority of payments now performed online, via card, or over the phone.
The piggy bank used to be the traditional way to help kids learn about money. They were reminded of the value of saving with every coin that hit the bottom. We’ve all learned about money with coins and piggy banks, but how do we teach our children about money in today's cashless society? Here's what the experts have to say about it.
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Dr. Carly Sawatzki, a Deakin University scholar, works with teacher associations and schools to assist educators in developing financial literacy lessons. She acknowledges that the elimination of tangible currency presents new challenges and learning opportunities for children. "Young kids need to be mentally prepared to keep track of money and learn to check their balance or top up their account," says Swatzki.
Public transportation cards are a simple way to illustrate the concept of a card balance from which withdrawals are made with each trip. Alternatively, movies that your children request to watch on iTunes or Disney Plus are a relatable example.
Non-bank fintech solutions such as pocket money applications and "buy now, pay later" services offer new learning opportunities for older children. These kinds of apps can help kids acquire personal organization skills, such as monitoring online banking accounts to see what's coming in and what's going out.
Setting an example
Despite all the changes, research suggests that it’s still vital to teach 3 key financial principles to your kids:
1 Encourage your children to earn their own money by encouraging them to be creative, work hard, and gather their rewards.
2 Encourage your children to come up with their plan or goal as the principle behind their management of money. This translates into them not spending on a whim and putting the majority of their money into a savings account to build towards the goal in the future as financially-aware adults.
3 Encourage your children to be up-front and ask permission. In the modern digital era of streaming services and linked household accounts, it’s important to have them consider whether they would buy the movie, game, or item with their own money, or would instead consider a cheaper option, like renting.
Getting involved in their world
Furthermore, while the financial landscape may have changed, your children are still likely to interact with economic principles—even in ways you may not be aware of. "Today's millennials often have some fascinating spending understandings that we do not really give them credit for," Sawatzki explains.
Take, for example, the famous video game Minecraft, which educates kids about economics by allowing them to trade, buy, and sell items.
These transactions could serve as talking points for parents and their children when it comes to financial matters. Ask them why they are prioritizing one item over another, or how they plan to increase their resources to a larger prize.
Older children seem to be getting more adept at navigating the virtual marketplace using technology like eBay and Gumtree to purchase and sell online. This means that they're more selective about the value that they place on things and what they consider to be a fair price."
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Educating on finances for adult wellbeing
Children and their parents must now navigate a more abstract financial landscape than ever before. In a complex world of cryptocurrencies and Afterpay, financial transactions are woven into everything from the TV shows we watch to the gaming platforms we use. Faced with a completely different scenario than when they were taught about money, parents are seeking to come up with innovative ways to teach their children about money, which we know is critical to adult wellbeing.
How can you get younger kids to understand the real-world implications of these invisible payments if they don't have cellphones or banking apps? It's all about bringing these cashless transactions to the attention of children by attributing a financial value to them.
Disclaimer:The information included in all of our blog content is of general nature only. Any general advice included in this information has been prepared without taking into account your objectives, financial situation or needs.
Because of this, you should consider the appropriateness of the general advice to your objectives, financial situation and needs and obtain professional advice before acting on any general advice that we have provided to you.