Changing habits as a result of COVID-19 and an increase in cards and contactless payments means cash is being used less and less.
While there are many benefits of cash alternatives, including convenience, instant transactions and secure payments, our shift in behaviour means that kids are growing up in a largely cashless society and learning very different things about saving and spending than we did.
So, what does all this mean for our kids? Given their generation may be operating in a wholly cashless society in the not-too-distant future, teaching them how to manage their money is essential. Here are a few things you can do to start setting good financial habits from a young age.
Talking to your kids about money in general
Raising your kids to be financially savvy is one of the best life skills you can give them, because they won’t instinctively know how to manage money. It’s something they need to learn and work on, and as a parent you’ll be instrumental in helping shape their relationship with money.
Your kids might come to you with questions about money, or you can start conversations when you’re in different situations – such as at the supermarket, or at a café. However you do it, it’s important to talk about how you earn the money you do, and how you get a certain amount of money to spend each month. You should also explain what that money has to cover – like food, clothes and the home that you live in.
Teaching kids how to manage their money
Your kids may already have a piggy bank or starter bank account and be learning about saving by stashing away their pocket money. That’s a great start, but it’s also important to teach them about the different ways you can spend money, especially cashless payments. You can do this in a number of ways.
1. Show them what things cost. If your kids are shopping with you at the supermarket, explain what happens when you tap your card to pay. Tell your kids it takes money out of your bank account to pay for the groceries, leaving less money in the account.
2. Teach them to budget. Start teaching your kids to compare different items at the supermarket by looking at prices and what you can get for that amount. Keep an eye out for child-friendly games, apps or books you can use to help make the process fun and engaging.
3. Guide them towards saving. In our instant gratification society, it can be tempting for a child to spend all their pocket money or their pay when they get their first job. Instead, help them set a savings goal and show them how to track their spending.
4. Explain how to pay a bill. When you’re paying an electricity bill or phone bill online, let your kids watch how you do it. Tell them how many hours or days you had to work to get the money to pay the bill so your kids start to connect the dots between work and the money you have. Teach them how to create reminders for bills by writing due dates on a calendar or creating reminders in your phone.
5. Help them create their own financial footprint. If your child is old enough to do chores and receive pocket money, consider setting them up with a bank account to show them how to digitally manage their money. This will help you explain how things like regular deposits and compound interest can make their money grow.
Teaching young adults about financial independence
Helping older kids on their journey towards good financial literacy is even more important. You’ll want to encourage them to get a part-time job and to budget for the things they need (and save for the things they want). If your kids are working full-time and still living at home, asking them to pay board can teach them first-hand about managing money and give them a sense of financial independence.
Teaching them about what rent costs, adding up utility bill costs and showing them how to budget for food and other expenses is also essential if your kids are thinking about leaving home. It’s likely all of these payments will be cashless ones, so it’s important they know how to safely make online transactions.
Understanding debt and how buy-now-pay-later services and personal loans work may also guide them into being smarter spenders.
It’s a lot to cover off, so you can always speak to a financial adviser for professional advice or seek out some reliable resources like financial podcasts, books or magazines to help you along the way.