Why I stopped giving cash pocket money to my kids

Cash pocket money helps children learn about money, but digital is how they’ll use it.
Cash pocket money helps children learn about money, but digital is how they’ll use it.

MY kids haven't been given cash pocket money for years.

It's not because I'm an evil father - who loves Darth Vader music - wanting to choke their financial freedom. It's simply because most of their financial transactions, and the future of money, is all digital or on cards.

Their snacks at school are bought using a prepaid card. They buy apps and music using their digital devices, and shopping for clothes, books and other goodies is usually done with gift cards that were birthday presents.

They're 12 and 11 and, like most kids today, are growing up as physical cash is in its death throes.

So why give pocket money in a form that may be effectively extinct soon? The rapid rise of micro payments and tap-and-go transactions is speeding up cash's decline.

Using physical coins and notes is a great way for young children to learn about money and mathematics, but once they get their head around how money works it may be wise to look at paying at least some of their pocket money in digital form.

The benefit in our house is that there's never a big pile of cash sitting in kids' money boxes or burning a hole in their pockets.

Children are spending and saving money much differently than mum and dad did.
Children are spending and saving money much differently than mum and dad did.

Instead it's in online savings accounts that delivers bonus interest and they get to watch it compound and grow over time.

The "out of mind, out of sight" strategy is great for adults too when it comes to saving or investing money.

Automatic transfers to a specific bank account or investment fund - before we get a chance to spend it - is a proven way to get richer faster.

Children and money will be in focus in the coming days as Global Money Week kicks off today. (March 12)

It's a financial literacy campaign that runs in 137 countries and aims to teach children better money management skills, with more than 30,000 Aussie students are expected to take part through schools or community groups.

Global Money Week national ambassador Marissa Schulze said financial professionals saw adults every day struggling with money management and its related stress and relationship breakdowns.

"Seeing this is a huge motivator for wanting to make a difference and help to install the right skills, knowledge and behaviours in children from a young age," she said.

"Many young Australians fail to get the financial literacy education they need from their school or their parents."

Ms Schulze said paying pocket money in digital form was a good idea once children became more confident with money.

"Around nine or 10 is probably the right age to transform from physical pocket money to digital pocket money," she said.

Topics:  children money parenting pocket money

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