In the age where so much of our spending happens by tapping and clicking, cash is becoming part of a bygone era.
Indeed, an entire generation of children is growing up in a world of ubiquitous digital payments. According to a new survey from TD, nearly 68 per cent of parents said their children are more or just as comfortable using digital payments as they are handling cash, with their kids' comfort levels increasing as they get older.
But with that familiarity come concerns. Eighty per cent of parents surveyed said they believed that living in a cashless society could have negative impacts on young people, while 58 per cent of parents surveyed said they worry it's becoming too easy for kids to spend money.
Meanwhile, 49 per cent of parents said they believed their children did not realize the consequences of overspending and 46 per cent said it has become harder for kids to learn the value of money.
To help parents feel more confident about teaching their kids about money management and to facilitate ongoing financial conversations, consider these age-appropriate tips:
Age 5 – 6: Introduce your child to money
- Whether it's a board game that involves money management or role-playing games with different types of payment methods, these activities can help kids to understand that payments can take many forms, including coins, bills, debit cards and credit cards.
Age 7 – 8: Take them to the bank to open their first savings account
- Encourage children to save some of the money they receive as gifts or allowance, as this will help build a good savings ethic early in life.
- Setting up online banking access is a great hands-on approach to teaching your kids about digital money management.
Age 9 – 10: Make the connection about earning money
- Talk to your children about your job and what you do to earn an income, showing them how the money is deposited either by cheque or by direct deposit.
- Start a discussion about some ways they earn money on their own such as doing additional chores like walking the family dog, doing yard work, or being a parents' helper.
Age 11-12: Discuss your financial goals with your children
- Explain why it's important to create a budget and how to do this. It's also helpful to explain how you try to save some of what you earn to achieve those goals.
- Encourage your kids to participate in decisions about how to spend the family money on things like vacations, holidays and gifts.
- Empower your kids by having them think through their spending decisions and encourage them to always ask questions about money.
Age 13 – 14: Advise them that they need to keep track of their spending and help them do it
- With digital payments and in-app purchases, keeping track of spending can sometimes be tricky. Take the opportunity to sit down with them to review account balances and interest earned on deposits.
- Tools and apps can help teach your child how to keep track of spending and develop healthy spending habits.
- Take the time to introduce the concept of credit. Talk to them about why you have a credit card, show them your credit card bill, explain how interest charges work and discuss the importance of making payments on time and paying the monthly minimum payment, or preferably paying off the balance in full each month.
Age 15 – 17: Teach kids why good credit matters
- Once your child understands how credit works, teach them about credit scores and the importance of establishing good credit for the future.
- Educate them that a good credit score can be achieved by always making bill payments on time. Let them know that establishing good financial habits will help them when it comes time to get a student loan, finance a car and/or qualify for a mortgage once they're older.