Making Money Digital… Is it Positive or Negative for Children?

A few days ago I was asked a few questions in response to a New York Times article about managing children’s allowances online.

Is making money less tangible and more digital for children, a positive or negative in this economy? Is it necessary considering the ever-changing state of technology? Can these sites actively assist in making youth less error-prone when making financial decisions?

My responses are coming from 16 years of being a mom, 18 years of being a business owner, 9 years of employing my children in my business instead of paying allowance, and three years of researching and blogging about RaisingCEOKids.

There are pros and cons to making money less tangible and more digital for children. Having things digital brings a lot of ease to the transaction and record-keeping process.

To be truly effective in teaching kids about money, you need to combine what works for you as a parent and what works for the child.

The downside of digital is that when people (both children and adults) are able to “touch” their money and have an actual experience (handing over cash and writing a check vs sliding a card) with their transactions, they are more conscious about their money and make better decisions and digital does not allow for this money consciousness to occur.

We combine technology with currency in our home and will continue to do that so our children will learn best practices for making great money choices in spite of money becoming more out of touch and more digital.

When the children get paid based on the work they do, it gets tracked in a virtual banking program and then when transactions occur, they are tracked by the child and then reconciled in their “virtual piggy banks” by me.

One way to make children more accountable in this digital world, is to have them keep a money journal of their income and expenses at the point of transaction. Truth be told, adults would learn a lot from this experience as well.

The sites mentioned in the article can be helpful for teaching your kids about money if they are used as tools to increase conversation between the parent and child with regards to what is happening with money. They can’t simply be used as a replacement for real teaching.

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