Singapore is well on its way to go cashless, with nine in 10 Singaporean’s preferring electronic payments over cash, according to Visa’s 2016 Consumer Payment Attitudes Survey.
Considering convenience and efficiency, mobile payments and tap-and-go technology become the go-to payment options, making money less visible than ever. Groceries are paid for with the wave of a credit card, shopping is paid for online and appear at your doorstep, and cash diminishes in importance as cashless options grow more favourable.
This makes it tricky for parents to teach kids about the concept of money. Kids come to understand money as a virtual concept where no physical money is exchanged. How then will they appreciate the value of money? We explore 3 pointers today.
#1: Kids Have Less Opportunity to Handle Cash
Think of the days when we saved up our pocket money in our piggy banks and felt the satisfaction of accumulating enough to warrant a trip to the bank to make a deposit. We watched our parents write cheques and pay for things in cash. Money was a concept that was tangible as it was physical, and could be felt with our hands.
Kids today think of money differently from the way we do. With the proliferation of cashless options, not much cash is exchanged during transactions. This limits the opportunities parents have to teach their kids about money management.
Also, not seeing physical money being exchanged makes it harder for kids to understand how money works. The concept of virtual money does not seem as easy to grasp (or teach, for that matter) when payments are so easily made.
The link between “invisible money” and real money coming in and out of their bank accounts may not be easily understood, and the value of money may be undermined if not taught well.
#2: Kids Will Be Paying with Their Parents’ Money
Parents have several ways of providing their children with allowance. For simplicity’s sake, let’s consider three ways: by cash, transferring a fixed amount to the child’s account, or allowing the child access to the parent’s account.
If children do not appreciate the value of money, whether in cash or cashless form, they may spend more than they should. The intangible nature of virtual money makes it difficult for kids today to appreciate the consequences of overspending, much less the concept of saving.
#3: Kids Need to Understand the Concept of Virtual Money
Cash may still be king today, but we need to prepare our children for the cashless society they will be living in. While educating them about money with cash helps them better understand monetary value, they need to learn that money is not just virtual, nor is it just physical. They must know that money is a medium of exchange of value, and how to manage it across the various forms it comes in.
Start the Conversation Early
Children’s understanding of money begins when they watch their parents make digital payments. As such, explaining digital money is important in preparing your children to manage their own finances.
Specially designed initiatives have been rolled out to help kids better understand money in a cashless world, such as the POSB Smart Buddy Watch, where kids wear smartwatches linked to their parents’ bank accounts. Parents can monitor and allocate spending for their children through an accompanying mobile app, and children can pay for things like food and books with their watches in selected primary schools and stores.
There also are other fun apps that can help teach kids financial literacy and expense management.
When you pay for something online, guide your children through the process and show them what happens when you click “pay”, and how money is deducted from your bank account. That way, you show them how virtual money works, and more importantly, that money most definitely does not grow on iPhones.