How do you teach kids how to manage money?

It is almost comical to think of a time where cash was the primary payment method. Imagine managing your entire family’s finances with no access to internet banking, savings trackers, or money management apps. When I was a kid, my parents had money stored under the bed and taught me how to manage my money with coins and a piggy bank.

Children growing up today are lucky enough to be brought up with technology that helps them track and visualise how they spend money. This new era of payments will give the next generation of children a better understanding of financial literacy, the value of money, and how to save and invest.

However, for parents to teach these values in 2020, they cannot use the same teaching methods that their parents used with them. Kids learn a lot at home and in their day to day lives. From an early age, kids pick up the habits they are exposed to from their parents and the same can be said of money habits. Often, conversations around personal finances can be taboo, but for kids to properly understand financial literacy, parents need to be ok with teaching it.

3 Tips for teaching your kids financial literacy

Here are some tips for teaching your kids the art of money management in a digital age.

Keep pocket money digital

As a concept, pocket money is not dead. But as we fast track to a cashless society, parents will need to shift towards a digital approach.

A recent research report from the Westpac, the 2019 Money Management Survey, showed that 76% of Australian parents are still giving physical cash and coins to kids as pocket money. ^[1]This is interesting when only 19% of retail payments were processed with cash in 2017 according to the Retail Global Payments Report from WorldPay. ^[2]

For kids to learn today, parents should consider introducing them to online banking and encouraging them to have conversations around how much money they have, what they’ve spent it on, and what they are saving.

For parents trying to demonstrate the value of money to their young children, understanding and using this technology may prove easier and more effective than the traditional pocket money transactions played out in their youth. You can even set up an iPad in the household, where kids can access these apps and monitor and assess their spending from home.

Start young

Kids learn by experience and what they’re surrounded by. This may be a scary thought, but your kids are constantly picking up your behaviors even though they may not properly understand why. This is the same with financial habits. Teaching your kids starts at a young age and it starts with you, especially in a digital age where money can seem invisible.

Make sure you’re incorporating conversations about money into everyday situations. For example, if you’re doing the grocery shopping, challenge your kids to pick which items are on sale. There are so many platforms today that help aggregate options and provide you with the cheapest ones. For example, price comparison sites like HotelsCombined or Skyscanner. Make sure you’re teaching your kids how to use these platforms and why we use them.

Money is real

When your kids are interacting with money from a young age, it is hard for them to understand the value of it, especially if it is usually given as a gift. Ensure all pocket money you are giving to your children is earned, that way they understand money is an exchange for the work you do.

You should also consider giving your children a limit on their expenses. This can be done on financial management apps. If you spend more than you have, your bank account does not just fill back up. As we progress to a society that is heavily dominated by credit cards and buy now pay later schemes like AfterPay, parents need to instill values of a money limit to kids today. This also helps engrain values of saving as kids will understand how important it is to always have money in the bank, in case they run out.

How to get started?

For children to properly understand money today, it is important that parents take advantage of the technology that is available to them. Even though some parents might find it daunting to teach kids financial literacy, we’re living in a time where it can be made easy with technology.    

ZAAP is a pocket money digital tool solution that allows children to have their own debit card as well as a wristband that they can ‘tap & pay’ with.

ZAAP allows children to see their balance, track their spending, and encourage savings. As they can only spend what is in their account, children will:

• Learn how to be financially responsible
• Build good money habits
• Learn the importance of saving money by setting savings goals
• Make secure purchases online or instore through “Tap & Go”

Get started today!

[1] Kids News - technology can be a helpful tool in teaching kids modern ways to learn the value of pocket money

[1] WorldPay – Retail Global Payments Report