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Tips for teaching kids the value of digital money

Tips for teaching kids the value of digital money

Veronica Howarth   ●   11 February 2015

One in three parents agree digital purchases make it harder to teach kids the value of money. Here are our tips for overcoming this.

It can be hard for kids to understand what they can’t see. And as there’s no visible exchange of cash for goods in digital purchases, teaching them the value of digital money can be challenging. Delving into the topic, we recently conducted some research1 which found that more than a third of kids (35%) don’t know how digital purchases are paid for. 

Our research also uncovered the most common myths kids believe about digital money, including:

  • 40% of five year olds think you can use a card to get free money from the ATM;
  • 61% of six year olds think you don’t have to pay money to watch movies on your parents’ tablet or smartphone; and
  • 33% of five year olds think there's someone behind the wall who gives your parents money when they put their card in the ATM. 

So, it’s clear we need to adapt our money lessons to incorporate digital spending. From experience, I’ve found the most effective way of doing this is to involve kids in the digital purchasing process. 

Sit them down when you’re buying 

If you’re buying your child a game on your smartphone, instead of making the purchase yourself, sit them down and explain how much it costs. If the game costs $5 and your child receives $10 pocket money each week, explain that it’s worth half their pocket money, and potentially deduct the amount from their allowance or piggy bank. This way they can see that digital money has value, like cash and coins. Our ‘Buying things online’ activity sheet could also help your child further understand the value of items in the digital world. 

Use day-to-day examples

If your child often accompanies you to the ATM, explain that the money you’re withdrawing is from mum and dad’s savings and is of real value. Small lessons like these will help build their understanding of digital money over time.  

Other lessons that Aussie parents have used to help improve their child’s understanding of digital money include:

  • Showing them the value of an item in an online store (25% of parents);
  • Opening a savings account with them (17% of parents); and
  • Giving them a prepaid card so they can make digital purchases (16% of parents).

Teaching children the value of digital money is key to their overall financial literacy. It’s also important to continue with traditional methods, such as School Banking programs, which teach lifelong money management skills. Traditional and digital money lessons should work in tandem and complement each other.

For more handy tips for teaching kids about digital money, head to The Beanstalk to watch our digital money ‘myth busting’ video and check out more downloadable activity sheets.

Veronica Howarth
Veronica Howarth

Head of School Banking and Youth

Veronica is responsible for Youth at the Commonwealth Bank. With over 20 years in the business, her passion is leadership, coaching and business transformation. She understands and appreciates the value of early financial management skills.

[1] About the research: A total of 1,027 surveys among parents of children aged 5-16 and 521 surveys among children aged 5-16. A quantitative online research methodology was used, with a 10-minute questionnaire for parents, and a five-minute questionnaire for children. National sample throughout Australia. The fieldwork was conducted between 10 and 15 December 2014.