The trouble with invisible money

It’s easy for kids to think of money as an infinite resource that magically regenerates every time you use a plastic card. But as technology makes money seem more and more invisible, it’s a good idea to talk to kids about what’s really going on behind the scenes.

When I was young it was easy. I popped into the corner shop with a handful of change and ran out with a big smile and a bag of lollies. We all knew exactly where our money went and what we could get for it, using musk sticks as barometers of our wealth. It’s trickier for today’s kids. As they see Mum and Dad paying with cards it can be less obvious when a transaction is taking place ­– especially when buying online or using the magic of Tap & Go payments­ ­– even I still do a double-take with that one.

Where money lives

I started by telling my two children where money lives. Not in the still-shining money boxes I bought them last Christmas, or “up in the sky” as my daughter once gleefully declared when I asked her where she thought her pocket money came from, but the bank. You know, that place they get dragged to from time to time and told to behave.

Actually, trips to the bank have been more fun since I told them what it’s for. I told them all our money is safe in a big vault at the back. And that every time we use an ATM, get cash-out at the supermarket or use our cards, a little man runs into our vault, gets out the right amount of money and passes it on. I also reminded them that if the vault was ever empty, we wouldn’t be able to buy anything, reinforcing the value of money.

Money and the Internet

Apps and online gaming make it really easy to spend online, with many encouraging real money purchases via in-game clicks. It’s this type of ‘accidental spending’ that can happen in a few taps or clicks. I foolishly linked my card to the app-store without password protection and found myself the owner of a virtual princess castle.

Shopping online can catch you out too, especially if you store your card details on site and stay logged in. If your kids are old enough, it’s worth explaining the security issues around buying online. Explain how the numbers on your card are like a key to your bank vault, and that they should always be kept secret, along with your personal details. You might also want to show them how to spot a secure site and shop online safely.

First-hand experience

I found that no matter how much advice I give my kids, the best way for them to learn something is to try it for themselves. So opening a savings account for both of them helps them to see for themselves the positive effects of saving. Being able to see their balance go up and down over time is a great motivator to help them adopt appropriate spending behaviour ­– and unlike leaving money in a piggy bank, they get to enjoy interest being added to their balance too. Now that is magic.

Top tips

  • Teach your kids where money comes from.
  • Make it clear when you are spending money, especially when using plastic cards.
  • Know which online sites have your payment details and make sure they are password protected, you log out, or block your kids having access to them.
  • If you have an iPad, you might also want to block ‘in-app purchases’.
Tap & Go are trademarks of MasterCard International Incorporated. Apple, the Apple logo and iPad are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

For related posts and downloadable activity sheets about financial literacy for kids, visit The Beanstalk.