In the digital age, it's becoming exceptionally rare to see people using cash when they're out and about. But when it comes to teaching kids about money, this isn't the lesson we want them to absorb.
See why using cash has a powerful way to reinforce money management, and how you can use it to teach your children about fiscal responsibility.
A Different Response
When you use cash, you see the physical currency disappear from your wallet as you spend it. When you use plastic, money begins to seem much less tangible. You may not notice how much you're spending until you review your monthly statement. Studies show that people who use cash tend to spend less than those who use credit cards. We start to physically attach to the wads in our wallets, no matter the size, after it's been there a few days. When we reach for it, something in our brain tells us to be careful about just how much of it we give up.
Practice What You Preach
You don't have to stop using your debit card all together of course, but this summer is a good time to begin keeping cash on hand. Your kids will see how spending has a direct effect on how much a person has. If you use cash to pay for goods and services, they'll have a front-row seat to how a large fold of bills can quickly turn into a single piece of paper floating around at the bottom of a wallet. It's a good lesson for kids who are used to seeing people buy everything online (seemingly by magic).
Bring Your Kids In
Your kids can start to budget their money at practically any age, and there's no time like the present. One idea to teach your kids the importance of cash is to give your child $10 when they're at a summer festival. Let them know that there are no restrictions on what they can buy, but they also won't be able to 'reload' at any point during the day. If there's any change at the end of the day or if they choose not to spend the money at all, they'll be able to keep whatever is left over. No matter how they choose to use the $10, they'll learn more about the consequences and rewards of managing cash. Their decisions at the festival will likely be very different when they know they have to pay for everything!