How do you teach kids the value of money in a digital world? The 6 hacks that actually help.

I was a really lucky kid. I hardly ever wanted for anything. 

And now looking back on it, I think my understanding of money was defined by the typical view most kids have. 

I had no idea if my parents had a budget, what they earned, how they saved or what investments they put their money into. 

Money was just something that was never discussed. 

One benefit I did have was that cash was always used so I could physically see the notes and coins exchanging hands, the money in my mum’s purse decreasing. But then she would go to the ATM and withdraw more. To me, it was an endless pool. 

Now I’m an adult with a family of my own, I look back and know that I appreciated everything they did for me. However, I also know that it gave me absolutely zero sense of what things were worth or provided any idea of how I should treat my money. 

Thank goodness I have grown up and found my way out of those muddled days. But unfortunately, I can see the sparkle in my 10-year-old daughter Summer’s eyes when I pull my debit card out to pay for her brand new Vans. 

It’s this clear lack of understanding around where my money comes from and what happens when we use it that sparked a series of ideas to help Summer understand how our now very digital way of life works for finances. 

Here are the 6 hacks that we use at home that have really helped build my daughter’s financial literacy skills.

For a teachable moment, let them blow it all. 

Birthday and Christmas money from friends and relatives are always sent to Summer as cash in a card. She collects it all up and zips it away safely in her purse. 

We can always see it burning a hole in her hand though. She’s so eager to get out and spend it.

We like to encourage her to think of something nice to save for — something that we wouldn’t buy for her unless it was a special occasion. 

One time, however, after a lot of back and forth, I conceded. I let her spend every single last dollar on whatever she picked up. 

And when we went to what was the last store, she saw something she really wanted. But she knew she had spent all of her money and couldn’t buy it. She left the shopping centre that day carrying a lot of bags and was filled with buyer’s regret. 

It was the perfect bitter pill that allowed us to have an open conversation about the implications to her savings whenever she spent money all willy-nilly.

Mix up pocket money payments.

Pocket money has always been a big hit and miss in our household. Summer is always keen to make money but isn’t overly good at sticking to the tasks required that enable her to get it.

I wanted to add some serious structure to this so Summer could learn that money isn’t just given to us but rather, has to be earned by responsibility, and consistently sticking to our jobs and doing them to the best of our ability. 

Image: Supplied. 

I basically told her that she had a job (like Dad and I) and if she did it well and when she was supposed to, she would get a weekly pay packet for it. 

The twist, however, was that half of her pocket money would be given to her in cash and the other half would be deposited into her savings account. 

By doing this, she is able to make a bit of a link between the value of her coins and notes, and the exact same value of what is transferred to her account online. 

Get them involved in creating the family budget.

I don’t want Summer being like me as a kid in that I just happily took what I asked for without having any real idea or understanding of what else my parents had to pay for. 

So she could build a good understanding and greater appreciation of what her Dad and I do financially for our family, I had Summer help me set up our 2022 household budget spreadsheet. She created the columns and headings in Excel and began to build it out with everything she thought we had to pay for. 

When she was done, I went in and added everything she missed, ultimately, giving the full picture of what it financially takes to keep our family and lifestyle running. I then added in the values. 

This allowed me to show her how much our living expenses are worth and that everything we buy her is additional to these expenses. She could see the total amount each week as well as what’s left over to spend and what will be saved.

From there, I opened up my online banking account on the computer and showed her how each of those things are paid by me electronically or taken from my account by the provider, each transaction decreasing my bank account.  

Tap and reduce.

The ability to ‘Tap & Pay’ when paying for something at the shop has really created a big financial education gap in the concept of paying for items.  

Summer once told me that it’s okay if something was really expensive, as I can just tap my card and pay for it that way. The link between the money in the account and the tapping of my card was completely non-existent. 

To encourage her to start thinking more about the process of spending and how it affects the money we have available to us, I took her on a trip to the shops.

Image: Supplied. 

We made a few purchases and after making each one via tapping my card, we sat down and looked at my banking app on my mobile phone. 

I pointed out how much was in my account before the purchase, how much the purchase was, and then where my account balance was now – she noticed that the amount we could spend had gone down. 

This was a great exercise as a starting point for conversations around how what we spend digitally, affects the overall money we have available to us. 

Encourage them to grow their own account.

Summer has had her own bank account since she was born. The purpose of this account is so that when she goes to university or moves out of home, she will have a solid foundation to start her off in adulthood. 

As she is only 10, she doesn’t currently have access to this account so doesn’t really see what money is deposited into it and how the balance is growing. 

I wanted her to have an understanding of this though so we went into our local branch and had the lady show her on the computer where her money lives and how it goes up every time we put money into it. 

Summer got so excited to see it growing and growing that on the way home she talked about adding to it when she got her first job so that one day she can buy a house and a puppy (oh my heart!).

Show them how the ATM impacts your balance.

Similar to tapping my card, for quite some time Summer thought that the ATM was just this magical machine that continuously spat out money at me to spend. 

She would eagerly stand beside me and wait for the notes to come out of the money slit like a big colourful tongue. 

I don’t get money out at the machine very often (I am so digitally driven these days!) but I made a point to do it one day so that I could show her that withdrawing physical cash from the ATM did in fact have an actual effect on my balance online.  

She then explained to me that when the balance is at $0, it’s all gone — no more can be spent and we can’t buy anything else. She 100 per cent made the connection between the physical and the digital. 

Financial literacy and understanding the value of what we buy and spend is something I will need to continue to talk to Summer about as she gets older, especially when she does get her first job and wants to buy more robust things for herself. 

And with a 2-year-old, it’s something we will need to be discussing and growing our own education on for many years to come.

My goal as a parent is to just help my girls make good choices for their futures, no matter how young they may be now. 

I feel that it is never too early to teach them about the value of money, especially within our very digital and forever changing world.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.

You should consider seeking financial advice before making any decision based on this information.

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Feature Image: Supplied/Mamamia.