Cash Is Blog

Why Cash is the Perfect Tool for Teaching Kids About Money

You always want the best for your kids. And that includes a happy future that isn’t plagued by financial missteps. So you know how vital it is for kids to learn about money before facing the big financial decisions of adulthood.

But who exactly is teaching your kids money management? In a recent survey, T. Rowe Price found that more than half of parents believe that schools aren’t properly educating their kids about finance. That means that it’s probably up to you to ensure that your kids learn those valuable money lessons.

What you may not realize, however, is that you already have the perfect teaching tool right in your wallet. It’s cash. With even a small amount of cash in hand, you can actually transfer considerable financial knowledge to your kids. Here’s why: 

Cash is tangible.

Many purchases, particularly those over $25, are made using plastic. Unfortunately, when seeing parents simply swipe a card at the checkout or tap a “buy now” button on their phones, kids can easily miss out on the idea that all these purchases require real money.

Cash, however, allows you to demonstrate the sometimes abstract concept of money much more visibly and tangibly. And, when your kids see you pay with cash, they learn some fundamental truths about money:

1. Money is finite.

The next time you head to the grocery store with your children in tow, try an all-cash trip. Let your kids count exactly how much money you’ve brought to spend. At the checkout, they’ll see the cash physically leave your hand and note that it’s gone for good once you’ve spent it.

2. You have to make choices about how you spend your money.

Try a real-life example to drive this point home with your kids. For instance, tell them you have $25 to spend on family fun this weekend. With that cash, you can all go to the movies or grab some ice cream, but you simply don’t have enough dollar bills available to do both.

3. Some purchases require planning and saving.

Does your child want a toy whose price tag exceeds her weekly allowance? Now’s a great time to highlight the power of saving for a goal. Help her tally up the cash she already has and figure out how much longer she’ll need to save. Learning the concept of delayed gratification now with cash can make it easier down the road to understand long-term goals like saving for a home or retirement.

Cash teaches hands-on math skills.

Physical money can be an invaluable tool in learning money management skills that have much wider applications. Even with just a handful of coins and crumpled dollar bills, you can successfully convey these concepts to kids:

  • Counting: Give your kid a few bills, or hand her a pile of cash in multiple denominations. See if she can count and determine the value of the money pile.
  • Addition and subtraction: Start your child off with 10 dollars in hand. Then ask, “How much money do you have when I give you a five-dollar bill?” or “How much do you have if I take away three dollars?”
  • Making change: Let your child play cashier with real cash. Say, for instance, “I’m buying a snack worth $1.25. How much money should I get back if I hand you this ten-dollar bill?”
  • Tracking a balance: Keep a notepad alongside your child’s piggy bank. Whenever she makes a deposit or withdrawal, have her note the amount in her written log and calculate the new balance of the piggy bank.

Cash makes financial education fun.

Sure, money can be a serious matter for adults, but learning about it doesn’t have to be dull. In fact, you can make the process fun for kids of any age with real or pretend cash: 

  • Play acash-based board game. Older kids may go nuts for Monopoly, the Game of Life, Pay Day, Money Bags, or the Allowance Game. And little kids will feel extra special having junior versions of some of these classics.
  • Try a coins-only game. Make up your own family competition, or borrow one of these popular coin-based games.
  • Play cashier at home. Slap some price tags on your kids’ toys, then go “shopping” in their toybox! Have your child “ring you up,” count the cash you provide, and make change as needed. Then switch roles.
  • Try to stump each other. Give both game players the same set of coins and bills. Then take turns asking questions like, “Which three coins am I holding if I have exactly 40 cents?”

Teaching your kids about money can be a daunting challenge. But you can make the process easier, more realistic, and even more fun with cash. And, by allowing your kids to interact with real money, you’ll build their financial confidence and empower them to make smart money choices of their own.

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