Teaching kids about money in a digital age

The piggy bank used to be the traditional way to help kids learn about money. Every time a child deposited a coin through the slot and heard it land with a satisfying clatter, they were reminded of the value of saving. 

But times have changed. The financial environment that children and their parents must now navigate is more abstract than ever. It’s a confusing world of Afterpay and cryptocurrency, with financial transactions woven into everything from the TV shows we stream to the gaming platforms we play. Faced with a very different landscape to when they were taught about money, parents are now scrambling to find new ways to teach their kids about finances—something that we know is key to wellbeing in adulthood.

The single biggest development is that cash has become increasingly redundant, with its demise accelerated by the COVID-19 pandemic. With most payments now made online, by card or by phone, finances are increasingly out of sight. The big challenge for modern parents is to ensure they’re also not out of mind.

Help them keep track

Deakin University academic, Dr Carly Sawatzki works with teacher associations and schools to help educators develop financial literacy lessons. She admits that the decline of physical cash creates a fresh set of challenges and learning opportunities for kids. 

“Young people need to be prepared to keep track of money mentally and learn to check their balance or top up their account.”

But how do you encourage younger kids—who probably don’t have smartphones or banking apps—to understand the real-world implications of these invisible payments? “It’s about making kids aware of these cashless transactions by assigning value to them,” says Carly. 

Public transport cards—the Myki in Melbourne or the Opal in Sydney, for example—are a relatively simple way to explain the idea of a card balance from which deductions are made with every trip. Alternatively, the movies that your kids ask to stream on iTunes or Disney Plus are another relatable example.

“When they ask to see one of these movies, make it really clear that you're not just saying ‘yes’, but that there's an expense associated with it,” says Carly. “You need to be actually talking about money changing hands through these invisible transactions.”

For older kids, Carly explains that non-bank fintech solutions like pocket money apps and “buy now pay later” services present new learning opportunities. 

“These sorts of apps can help kids to develop those personal organisational skills, like checking into your online banking account to see what's coming in and what's going out.”

Set the example

Despite all the changes, Mark Brennan, Head of Credit and Risk of Australian Unity Bank, believes it’s still vital to teach three key financial principles to your kids. 

The first is to encourage your children—depending on their situation—to earn their own money. “My wife and I encourage our two daughters to be creative, to work hard, and to gather their own reward,” Mark says. 

Mark’s second rule is to encourage your children to come-up with their own plan or goal as the principle behind their management of money. “We tell our girls to have a plan, stick to it, don’t spend on a whim, and put the majority of their money into a savings account to build towards the goal.”

And his third rule? In the modern digital era of streaming services and linked household accounts, Mark encourages his children to be up-front and ask permission. “I also ask them to consider whether they would buy the movie, game or item with their own money, or to consider a cheaper option, like renting,” Mark adds.  

Engage with their world

In addition, while the financial landscape may have shifted, your kids are still probably interacting with economic principles—just in ways you may currently overlook. “Young people today often have some interesting understandings about spending that we might not give them credit for,” explains Carly. 

While parents can worry about screen time’s negative aspects, it can also be rife with financial learnings. Take the popular video game Minecraft, which teaches kids about economics by trading, buying and selling. Or consider other games that involve virtual stores where players receive a set amount of funds to buy things like a crown for their avatar or enhanced weaponry.

Carly suggests these dealings may create potential discussion points for parents to interact with their children about financial ideas. You might chat to them about how why they’re prioritising one item over another, or how they plan to build up their resources to acquire a bigger prize.

Older children are also becoming increasingly savvy about navigating the virtual marketplace. “Increasingly they have experiences with second-hand markets where they're using technology such as eBay and Gumtree to buy and to sell online,” says Carly. “That means they're more discerning in terms of the value they assign to things and what they think is reasonable to pay.” 

Carly’s advice is to take advantage of these opportunities to engage with your kids about money. Consider them the modern incarnations of the humble piggy bank—just another way to teach dollars and sense.