We’re Living in a Cashless World—Here Are 3 Rules for Teaching Kids the Value of a Dollar

Of course we want our children to understand the value of a dollar. But in an increasingly cashless world—you know, one where we tap or click to pay—how do we communicate the role money plays in our lives? To find out the best approach, we spoke with Jacqueline Howard, head of money wellness at Ally Bank, about how to make money a household conversation from a young age.

About the Expert

Jacqueline Howard is head of money wellness at Ally Bank. She’s also a leading voice in financial health and wellness (and the mom of two kids).

1. Talk About Transactions, Even When They’re Virtual

Let’s say you’re shopping at Target or grabbing a muffin on the way to school. All your kids see is you swiping your debit card. But that doesn’t mean you shouldn’t talk it through. “Tapping to pay is part of our culture now, so if that’s how you’re paying, tell your kid that,” Howard says. “After a transaction, ask, ‘Honey, do you know what this is? This is a debit card and this card lets me get money from my bank.’ Then, ‘Do you know what a bank is? A bank is a place that I put my money and it keeps my money safe.’ Finally, ‘This debit card is very important because it’s connected to mommy’s money that’s in the bank. That’s how we’re able to buy things.’” Per Howard, you don’t have to go much deeper than that. The goal is to help with understanding—even a simple explanation can help your kid develop a foundational relationship with money and spending.

2. Enlist Your Kids’ Help in Making Low-Stakes Money Decisions

Learning the value of the dollar comes with spending practice, which means we need to give our kids the chance to actually buy things. But, whether they’re spending their own money or simply begging for yours, Howard says it’s important to have a conversation together about the value of said purchase. For example, Howard’s daughter loves Squishmallows. She acquired one, two, three, four Squishmallows. The joy! But after the fifth Squishmallow, Howard said it was time for a conversation. “It’s asking, ‘Do we really need another Squishmallow or is there something else that we can save for instead?” A lot of people avoid these convos with their kids or shut the discussion down with an authoritative “nope,” but according to Howard, “the goal is to step in as an authority and discuss the reasons we’re not going to overspend on one thing.”

Similarly, Howard’s son loves DoorDash. “The conversation has become, ‘Can we afford DoorDash as a family? Yes. Is this a good use of our money for you to DoorDash something that is $20 every day? No, it’s not.’” The best balance, she says, “is to allow kids to make some of their own low-stakes spending decisions, then as a parent insert yourself at the right moment so that they can learn to be good stewards of their money.”

3. Give Kids an Allowance

We’re living in the age of Amazon delivery. (Raise your hand if your kid also thinks that, poof, any time they need something it’s delivered to their door next day.) Howard says that an allowance is one of the best ways to help our kids achieve clarity about how much things cost, what’s worth saving for and how you make transactions. “I like the spend/save/give approach,” she says. “Go to the store and get clear Tupperware containers and let your kids decorate them and label them, spend, save and give.” Then, on a weekly or biweekly basis if you can, distribute an allowance.

In Howard’s household, she started when each of her kids turned six and based the amount on their age. (This means that her daughter, who is 7, now gets $7 a week.) “She puts $2 in ‘spend’ and $2 in ‘give’ and the rest in ‘save,’ Then, from an early age, you’re helping them to develop their values and the idea that, sometimes to get what you want or need, you may have to save for it.”

“The reason why I suggest clear buckets is because kids need to see actual money,” she says. After all, even if you don’t use much cash anymore, “there’s an excitement for kids when they watch their ’save’ buckets grow or hold onto some money in their ‘spend’ bucket because they know they want to buy something special.”

But what if they want to spend that physical money on a virtual thing (say, a new game they download from Nintendo)? “In this case, I would recommend charging it to your card, then they pay you back from their ‘spend’ bucket,” Howard suggests. “The virtual world can be fun and exciting, but it’s so important for parents to explain to their kids that buying things in the game does still require real money.” Howard also recommends making use of parental controls so kids can’t always just click to buy.

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