How do you talk to kids about money? By first understanding the way we handle money has changed, experts say
Even if virtual transactions are the norm, teaching children to use cash provides the foundation for understanding a lifetime of financial transactions. Even if you rarely carry cash, here’s why you should use cash to teach your kids about money, as well as some tactics for using cash.
- First, understand that increasing use of debit cards, online retail and other virtual transactions – with no cash actually changing hands – is a fundamental shift in the way we pay for goods and services. Much like streaming and downloading have transformed the music industry (where there is no longer need for a physical package like a cassette tape or CD), the exchanging of bills and coins back and forth is rapidly disappearing. Make a point to use cash for some transactions in front of your children.
- Although cash is becoming less commonly used, it is still a good way to teach children about money. Children largely learn by touching; physical money (coins and bills) allows them to grasp the concept of paying for things. Experts suggest starting early, with small amounts, to set the emotional stage.
- Using their own money to buy things allows children to see how the exchange works. Instead of buying a toy for them, allow the child to buy a candy or a toy so that he or she can experience the transaction – getting what they want but recognizing that they receive less money back in exchange for the purchase.
– By Ottawa Parenting Times Staff, with files from the Chartered Professional Accountants Canada