Invisible Money – How to teach kids about money in a cashless society

Think for a moment about how many of your day to day transactions are made with actual notes and coins. In a world without cash, what are the implications for teaching children about money?

The Global Issue of Invisible Money

In 2014, the US Parents, Kids and Money Survey suggested 73% of parents agree that because of digital transactions, kids think of money differently than they did when they were growing up. An Australian survey revealed that over one in three (35%) children simply don’t know how digital purchases are paid for. Whilst in the UK consumers recently passed an important milestone on the path to a cashless society, with cash now used for less than half of all payments. These statistics highlight the influence digital technologies can have on how children understand money.

Not seeing physical money exchanged for purchases makes it harder for kids to get their heads around what things cost and how money works. They might not easily see the link between the ‘invisible money’ of online payments or contactless purchases with real money eventually coming in and out of their own bank account.

invisible money how to teach kids about money in a cashless society

Where Money Comes From

It’s not difficult to see how in an age where we can slot a plastic card into a ‘hole in the wall’ and obtain physical currency, or where you can ‘tap and go’ to pay, how our children might not fully understand where the money used to pay for things comes from. One method of explaining this is to describe to your kids the purchase path or the flow of money; from earning it, to depositing into the bank and ultimately the final purchase and receipt.

Making the point of using cash occasionally, rather than electronic funds can also help to provide younger children with a visual representation of how currency works. Once they understand physical money you could slowly introduce them to the idea of online and credit purchases.

 

Pocket Money and Chores

Many parents recognise the value of using pocket money, or an allowance, to teach children about budgeting. Giving your children pocket money in return for jobs around the house can help them understand the connection between time spent doing work and money. A weekly pocket money allowance can also help to develop your kids’ budgeting skills. If you give them a weekly sum which includes both an element for daily routine activities plus some personal discretionary money, it can teach them to prioritise between needs and wants and make choices around spending and saving.

Understanding the True Cost

Mobile phones and tablets make it easier for your children to spend money online sometimes without even knowing it. Another example of invisible money is where many games and apps are now ‘freemium’ – meaning that whilst the app was initially free to download, it will proceed to ask users to purchase special features or content for a fee. If making app purchases is not prevented by a password prompt, then a couple of accidental taps in a game could cause your children to make real-money purchases.

Figures show that 61% of kids are buying apps or making in-app purchases every month, it’s important therefore as parents to establish some ground rules to ensure your child is conscious and aware of the money he or she may spend and its consequences. One useful tip is to ask for the money from your child before they make the purchase to establish the connection that it is still real money.

Setting up a bank account.

Once they are old enough and especially when your child has a job or gets an allowance, having a bank account and watching the balance grow (or shrink) is important. By downloading the bank’s app they can easily monitor and track his or her spending. Another important habit for later in life.

If you can’t beat them join them

The ease and convenience of cashless transactions puts us on an irresistible march towards a cashless society perhaps in your child’s lifetime. Get them prepared early by giving them a prepaid card with a weekly or monthly allowance. These cards can be monitored online and teach the principle that money, whether invisible or not, can only be spent once.

 

Teaching Your Kids About Car Finance

Kids grow up so fast, sometimes too fast – especially when they start talking about getting their first car. Kids may not realise the financial implications of getting a car, but you do. Teaching them from a young age will help them understand what responsibilities they will need to take on when they get one, even if you agree to cover the cost until the leave for university. Having a car will be one of the first major financial responsibilities your child can have, and it’s important to prepare them right for it.

Have them save towards the car

Teaching Your Kids About Car Finance - toy car image

Image from Pexels

One way to teach kids about car finance is to make them save towards any car they plan to have in the future. Whether this is through saving their allowance or getting them to take on a part-time job, it’s important that they realise that saving is a key part of getting the things that they want, rather than relying on borrowing/credit to get there faster. One way to get them to learn is to teach them about cutting household expenses and other costs which could help them to make the savings they need.

Show them the bigger picture

As well as the cost of a car, children will need to know about the other costs that come with it including fuel costs, repairs, maintenance, and insurance. These costs annually can amount to as much as the car itself if their first car is an older car, and they will need to learn how to work and save to be able to afford all of these things, and not just the car itself. If you want to take it further, you can talk to them about pricing up the cost of accidents, why they might need to hire a personal injury lawyer and the costs associated with parking fines and speeding tickets. The message her is that a car isn’t just a single item, there are many other responsibilities that come with it.

Don’t stop at now

For most kids, a first car will be more of a run-around, a second-hand car which will teach them responsibility as well as helping them to learn to budget. This could teach them more about car finance and responsibility than getting them a brand new car would. In the future, your kids will need to earn money in order to afford a nice new car, and learning all about the different finance options, including leasing, will help them understand for when that time comes.

Even if you’ve done all you can to put them off the idea of owning a car for the meantime, it’s a subject that will keep coming up as they get older. Helping kids find ways of saving for a car will make the end reward much sweeter for them, and will make them appreciate their car more because they bought it with their own money. There’ll be tough lessons to learn, but you can certainly guide them from a young age.

How to Teach Your Kids to Cut Household Expenses and Save Money

Cutting down on household costs is a goal for many families. It’s where you live and relax, so your home is most likely eating off a big chunk of your budget every month – it’s how it should be. Still, wouldn’t it be nice to keep a bit more of your paycheck next month, live the way you’re used to, and even get your family to help pull the load? Here are some pieces of the best advice we have heard and found useful on how to cut household costs for the whole family.

How to Teach Your Kids to Cut Household Expenses and Save Money - children writing image

Image source: Pexels

If your children are old enough, you should involve them in your finances by talking to them about it. It doesn’t quite cut it to simply say that times are tough or that you can’t afford something; they need the context that you already have.

Energy Savings

It is the most obvious one, so we better get it out of the way fast; a green household is a wealthy household, or at least a more frugal one. There are a lot of ways to saving money on your monthly energy bills without being too warm, cold or left in the dark. Now that it’s summer, you’re able to save a lot more than during winter, so you better get started.

First of all, keep the aircon off by keeping the heat out. A wide open window with curtains blowing in the wind seems perfect for summer, but it will only allow that cool inside air to disappear out into the humidity. Keep it closed when it’s at its warmest, even the shutters should be drawn, and any rooms you don’t use should also be closed off. You might spend your days walking around the house and closing windows after your family, so turn the aircon off, and you’ll see how easily those windows can stay closed on their own.

Give your oven a break; it deserves it. By focusing on cold dishes, you can involve your children more in the kitchen, too. Food full of colors, fruits peeled, cut and decoratively hanging out on a plate, is sure to get them interested.

When the bill arrives, show it to your children and give them an energy tour around the house. Point out the different expenses on the bill, what they mean, and what you can do as a family to make the household use less energy. Explain that there are more advantages to using less energy than financial ones; it will make the planet happier and give you all a better future.

A low energy bill means more money to spend on other things, as well as less financial worries. If the worries get the best of you, or if you have an unexpected and big amount to pay, it could be better to look at different ways of covering the debt initially. Get loan details here and make sure you read this article on questions you should ask before taking up a loan.

Grocery Savings

When you want to cut down on the amount you spend on groceries, you have an ocean of opportunities. Besides from using those coupons, and planning your weekly or monthly shopping ahead, you should also try to substitute your meat meals with beans and rice – at least for a day or two of the week.

Getting children onboard with this is usually not a problem, but if it is, a good advice is to bring them with you to the grocery shop. Not just to run around and be in the way of other shoppers; involve them in the grocery shopping, point out the prices on different products, and explain that you’re trying to save as much as possible.

If they are old enough, it’s a good idea to let them do a bit of the shopping once in awhile. Send your two oldest off together or make them bring a friend and a bicycle – just make sure to write a list and give them a limited amount of money. That way, they’ll be forced to manage the money when finding the right products and it will make them more aware of the prices, too.

Try to stick to the more budget-friendly grocery shops, by the way. The better you know a shop, the more likely it is that you’ll also know where their best sales are, how low you can go, as well as their in-store policies in general. The largest shopping of the month should be done when it’s relatively empty and when you’re not hungry or stressed – it seems obvious, but it’s a tough rule to follow.

Budgeting

A parent who manages his own budget is one thing, but that doesn’t mean your child is secretly watching and absorbing all of your knowledge. They need to learn these lessons too – and you should be the one teaching it to them. Giving them an allowance every week or month is something most parents find useful; it teaches their children the value of money as well as the skill of budgeting.

How to Teach Your Kids to Cut Household Expenses and Save Money - painted piggy bank image

Image source: Pexels

Some choose to give allowances after certain chores are completed, which may work well for some, but not everyone. It might end up teaching your child the wrong type of lesson; specifically that if they don’t get an allowance, they don’t have to complete their chores either.

Unbelievable as it might sound to us hard-working grown-ups, this is a deal that could be worth it to them. The bed will still be warm and cozy at night, and there will be dinner on the table in the evening – so why do these tedious tasks when all they have to do give up is a couple of dollars per week? The lesson they learn is not what you had in mind at all.

If allowances based on completed chores works for you, then continue with this system. If not, on the other hand, you should consider giving them allowances for the sake of learning how to budget and expect them to keep helping out at home nonetheless. Nobody gives you money for making your bed, taking out the trash or walking the dog; it’s just something we need to do.

3 Ways To Inspire Your Child To Make Good Financial Decisions Through Life

3 Ways To Inspire Your Child To Make Good Financial Decisions Through Life - kid with money image

Flickr

Time spent educating children is time that is never wasted. Unfortunately, despite school teachers and the school faculties best intentions, it’s difficult to fit in every lesson at school that it takes to become a responsible, sensible person in later life . Kids have a lot to deal with, not only growing up and coming to terms with their identity, but also increasing levels of responsibility as the years pass on.

Filling your child’s head with knowledge is fantastic, and will surely help them in later life. But giving them guiding principles to live by through inspiration and demonstration is more valuable than anything you can tell your kids. So how do you kindle this burning fire of curiosity that children seem to so naturally emanate? Here is a list of 6 different methods you can use to not only teach your child or pupils positive life lessons, but to bond with them as well.

  1. Take an interest in them.

Kids are naturally attention hungry, especially from those they rely on. If you water them with this special ingredient of available openness, listen to what they’d like to achieve in life, and stimulate a few ideas based off of what they say, you can really open their mind from an incredibly young age.

For example, let’s say your daughter says she’d like to ride horses and play with ponies all day when she’s older. Perhaps you could suggest she’d like to be a vet, and help all animals who are poorly feel better! Or perhaps she’d like to open a sanctuary for horses and donkeys. Sit back and watch as her eyes widen with excitement. Keep this up and she’ll start believing she can do anything, which, of course is absolutely true.

3 Ways To Inspire Your Child To Make Good Financial Decisions Through Life - image of an excited girl

Flickr

  1. Help them envision their future life.

Helping a child envision their future life is something that is immensely beneficial to opening up their horizons. Of course there’s no need to come to concrete answers, and this exercise should be fundamentally fun. However, sometimes it’s great to stimulate their imagination. For example, you could ask what sort of pets they’d like as an adult, what countries they’d like to visit, or you could go to a website like Pink Realty to give them an idea of the house he or she would like to throw family parties in one day.

  1. Show them the benefits of saving money.

Kids are impulsive, and most adults are too. It’s a good idea to show them, through subtle, unintrusive ways, the best way to manage money effectively. You don’t have to sit them down and teach them the finer methods of understanding balance sheets, but perhaps giving them a small allowance to earn (if old enough,) and letting them spend it once a month only will teach them the value of saving in order to acquire higher value items, or replacing items they didn’t think they lost. You can also tell them in a way that will make them proud of you how your savings have helped you pay for unexpected bills etc, and they will slowly (hopefully) start emulating your habits in their teenage and young adult years.

These three combined steps will not only help your child begin good habits in a way that will bring you closer together and give them a slight understanding of how you run your family, but they will desire to emulate you. Kids are impressionable, so make sure to use this to their advantage.

This will hopefully provide the correct attitude that will stop them making big mistakes in adulthood. You can be sure then that you’ve covered at least some of the bases your tough job of parenthood requires you to address.

Teaching Children to Use Technology in Potential Future Businesses

King Arthur had the sword of Excalibur; Harry Potter had the sword of Gryffindor; and Bilbo Baggins had Sting. All three of these fictional characters needed their fictional weapons in order to become the heroes of their respective stories; and both you and your children can become the hero of your own stories by using the weapon at your disposal: modern day technology. If you’ve found yourself, of late, having a bit of a financial nightmare with your business, then fear no more because you can turn it into a dream; and if you want to teach your children about how to never get into such a situation: here are just a few technology services and tips that you can wield in order to save your business’s story from finishing before it’s even had the chance to reach it’s full potential, and maybe even pass on to your children to make them want to start their own.

Teaching Children to Use Technology - tablet image

Image source

First of all, merchant services are pivota. A type of bank account that allows businesses to accept payments in multiple ways (typically debit or credit cards). With the pace of change in the UK payment market, for example, showing that over the past five years the debit card has proved itself as not only being the generally preferred method of payment in regards to frequency, but also the one that holds the most value in terms of total amount, it is paramount that if you haven’t done already, you utilise such a service. Not only will it save you from making those dreaded trips to the bank for bags of change, but it may save and even bring you custom. For example, a prospective customer may automatically think that you have technology driven payment facilities, such as a credit card reader, and subsequently not think to bring any notes or spare shrapnel with them. If they were to do so and then turn up at your till to find that they in fact couldn’t pay for their chosen products in one foul swoop of their debit card they may become annoyed, leave and never return to your business: losing you both a potential customer in the future and also their custom now.

Secondly, using electronic receipts or invoices is both easy to do and environmentally friendly. Most importantly for you, however: they help your business save money. By having electronic receipts instead of physical, paper ones you can completely cut out the use of any printing facilities, meaning either you can buy more paper for other things, or get rid of it altogether. Also, quite sneakily but not illegally, you obtain instant access to a prospective customer’s email address of which you can contact in the future if ever you offer a product that they may be interested in. Here are five apps that help you with the managing of the receipts.

So whether it’s you that needs the help with your dream, or you wanting to make sure that your children’s business dreams can come true, make sure to remember that technology is our friend!