Piggy Banks vs. Banking Apps: Teaching Kids About Money in the Digital Age

When you buy food with a swipe of a card and pay bills with a
click of a button, what are your kids learning about money?

“It is getting harder and harder to teach our kids about money
and finance in the digital world because there’s just not as much
opportunity to interact with money,” said Liz Frazier, a New
York-based financial planner and author of the upcoming book

“Beyond Piggy Banks and Lemonade Stands.”

In a world of neat budgeting apps and debit cards for kids,
Frazier recommends sticking with the basics — at least initially.
Start kids on the three piggy bank system — one for spending, one
for saving, one for sharing. Frazier uses simple clear jars so they
can see their money grow.

Children also learn about money by watching their parents. While
swiping a debit card at the store makes sense to you, kids don’t
concretely view that transaction as spending money.

“As parents, we should try to expose [children] to real money
whenever we can,” she said.

For those who don’t regularly carry around cash, this is
easier said than done. Frazier recommends starting off with smaller
purchases like coffee or lunch at a restaurant. Show your kids the
bill, help them count out money for payment and ask them to check
if they received the correct change.

When you aren’t using physical money — like when you use a
debit card for groceries or a check for a school fundraiser —
treat those moments as opportunities to advance the money

“Start explaining the differences between what payment method
you’re using — the debit card, credit card and cash — as
you’re using it,” Frazier said. “They’re not going to
totally understand everything in the beginning, but you just want
to get them comfortable with the product.”

Once you feel your child has an understanding of money basics
and has had plenty of interaction with physical cash, opening a
bank account for your kid can serve as a good transition to working
with online tools and digital transactions.

Fight the temptation to start an online account from the
convenience of home. Visiting a brick-and-mortar bank or credit
union is a better learning experience, Frazier said.

“Go to the bank together and have the banker explain to your
child that you’re opening up an account,” she said. “At this
point you can get a debit card and start using it together at the
store or getting out money at the ATM. You can also look at the
statements every month, or every week if you want to, and walk
through what money you put in [and] what you took out.”

Opening a savings account is a good opportunity to
introduce your kids to the concept of interest
— how their
money increases when they let their savings sit.

Pro Tip

When introducing your kids to money management apps, Frazier
recommends including them in the research to find one that is
established, secure and engaging.

Conversations about money lessons for kids should stay positive
and focus on useful information. If money stresses you out, do your
best not to convey that to your children. Instead focus on the
lessons you’ve learned from your financial mistakes. And don’t
forget to tell your kids about your success and what goals you

It’s Never Too Late to Provide Money Lessons for Kids

Speaking of financial mistakes, Frazier said exposing your kids
to money at an early age allows them to make mistakes when
they’re young enough that the consequences aren’t so

Maybe they spend all their money on a trendy gadget that turns
out to be a dud, or they give in to an impulse purchase that sets
them back from saving for something they really want. The fallback
from those choices isn’t as devastating as not having any savings
when an emergency pops up as an adult.

If you’ve missed out on teaching your kids about money in
kindergarten and now they’re in their teenage years, it isn’t
too late to start having personal finance discussions. As a
financial planner, Frazier sees the negative consequences that come
from people not being taught about money.

The Penny Hoarder conducted a
financial literacy survey
in March and found that adults who
didn’t grow up learning about money made less income and had less
savings than those who were exposed to financial literacy growing

Teaching your kids about money is the best gift you can give
your children, Frazier said.

“They are going to learn it one way or the other so you want
them to learn it the right way,” she said.

Key Takeaways

  1. Give your children experiences with tangible money.
  2. Include your kids in conversations about financial
  3. Open a bank account for your kids to transition them to the
    world of digital finance.
  4. Share your personal lessons, successes and goals with your

Nicole Dow is a senior writer at The Penny Hoarder. She
already talks to her 4-year-old about money.

This was originally published on
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Source: FS – All-News2-Economy
Piggy Banks vs. Banking Apps: Teaching Kids About Money in the Digital Age