Learning how to manage money is hard enough for children, but in today’s digital world, this task is even more difficult as purchases get more and more invisible, and children see actual cash less and less.
The Commonwealth Bank of Australia recently conducted research that demonstrates some of the problems parents face when they try to explain what digital money is to their kids.
When you read these statements, you might think that your parenting job is too complicated. You might throw your hands up and say that they’ll get it one day when they are older. But when they are older might be too late. Don’t wait. Everyone should start explaining digital money to kids when they are still very young and it's not hard to do.
Understanding Digital Money
When you go to an ATM to take money from your bank account, explain to your child that the ATM is connected to your account at that bank and will give you money as long as there is money in your account. Clarify that whatever amount you take out at that moment will be subtracted from your account balance.
Give similar explanations when you pay for purchases with a debit card at the supermarket or at the shopping centre. Make sure that your child understands that the cost of the purchase will be subtracted from your bank account.
The concept of actually paying for an item gets even fuzzier when purchasing items online. Once again, it’s important to clarify with your child that the cost of that item will be subtracted from your bank account. It can also help if you take your child to a physical store where they can see the very same item with a price tag.
The concept of money being taken from your bank account will be difficult for your child to understand. So when they seem ready, take them to a bank and open a savings account with a debit card. Teach your child how to access the account online so they can track their own purchases. Having their own account and being able to see the money going in and out will solidify the concepts you have been teaching.
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