By Jason Bryce
How can kids learn about money if they don’t handle cash?
Financial capability relies on good financial education and parent role-modelling most importantly.
Traditionally children learn about money and the value it holds by handling cash, notes and coins in their hands and using it buy things or save in a money-box.
“With credit cards, tap-n-go, online banking and shopping, kids do not often see actual money changing hands.”
The common pathway is a pre-school child will handle coins and the occasional note, manage them in a money box or piggy bank then graduates to a school bank account at about age eight.
Here is a common timetable for children’s basic financial education:
1. Pre-school: Handling coins and cash, saving and managing a money box, playing shop
2. Primary school: Opening a bank account, saving for a goal, spending at the shops, doing jobs for cash.
3. Early teens: Managing wallet, purse, cash and an Eftpos card, transaction and savings bank accounts and mobile phone, online and in-app purchases, working for pocket money.
4. Teens: First job, TFN, making larger purchases, buying clothes, comparing accounts and financial products
5. Late teens: Paying tax, opening and understanding a super account, credit cards, Afterpay, managing spending and income, saving, taking out a loan, investing
The key recommended (government) resource for parents is “Teaching kids about money” by ASIC’s Moneysmart service. Moneysmart advises parents:
“With credit cards, tap-n-go, online banking and shopping, kids do not often see actual money changing hands. This 'invisible' money makes it easier for them to think money is unlimited, rather than earned.”
Moneysmart says ‘seeing notes and coins can make it easier for kids to grasp the concept of money.’
It’s not rocket science and Moneysmart confirms the value of cash to kids:
“Handing over money in exchange for something can give them a sense of what things actually cost.”
“Seeing notes and coins can make it easier for kids to grasp the concept of money.”
ASIC recommends a piggy bank for younger children that keeps coins and notes. When you think they are ready, a kids bank account is a good way to introduce concepts like saving, interest and banking.
The World Health Organisation says people using cash,especially shop assistants, should practice good hand hygiene The WHO has not warned consumers against using cash during the COVID-19 pandemic. The WorldHealth Organisation has made public statements about this.
“You should wash your hands after handling money, especially if handling or eating food,” said WHO spokeswoman Fadela Chaib.
“Doing so is good hygiene practice.”
The Reserve Bank of Australia has also had a look at the issue of cash and viruses and decided that Australian polymer notes are a ‘minimal risk.’
Tim Wildash, CEO of Next Payments, Australia’s biggest independent ATM network, said he uses cash to teach his kids about the value of money.
“Cash is important for kids. I always gave my kids cash pocket money and I love the way cash helps kids and young people manage budgeting and spending.
“It is all too easy to tap, tap, tap your money away using a card,then get hit with fees and possibly interest charges.
“With cash, everyone can understand that their spending is limited by the money they have in the pocket. I think that has been a really powerful educational tool for me and my kids,” said Tim.
All retailers in Australia and New Zealand need to continue to accept cash during and post COVID-19. While everyone needs to follow government health advice and the advice of the World Health Organisation, cash is an important legal tender and the backbone of our economy.