Do kids think money grows on trees? No, they don’t. They think money flows endlessly from gift cards, credit/debit cards, and apps like Venmo and PayPal. That is because gift cards and credit/debit cards do not shrink when money is spent or grow larger when money is added. Apps like Venmo remain on the phone whether there is a balance or not. For children, perception wins out over reality. Logically then, children see these as endless sources of funds to buy anything their hearts desire. In a child’s mind, there is an invisible disconnect between the value of money in hand and the amount spent or owed.
Plastic and virtual spending is here to stay and will continue to evolve. It is important for parents to find a way to teach children to link the invisible, abstract value of money to become savvy consumers and astute money handlers.
The solution is easy. Give your children cash and coins. Buy their gift cards with the green stuff. When in-person cash payments are possible, let the children count out the bucks. Before any virtual transaction, tell the kids to hand over the cash to the adults who complete the transactions for them. Money comes in and money goes out. Perception meets reality when children learn how money works and a future financial planner is born!