A recent report by WealthiHer found that the decrease of cash pocket money puts children in danger of developing an understanding of the value of money.
WealthiHer was founded in 2018 by entrepreneur Tamara Gillan and financial expert Lauren von Stackelberg to create a “force for change, championing the transformation of the industry’s approach to women. Helping women be more understood, accepted and catered for and in doing so supporting women to protect and grow their wealth.”
WealthiHer’s report found that the overall number of 11-year-olds who received an allowance that was paid directly into a bank account rather than paid in cash had increased by 20% over the past 6 months.
The report also said that with a lack of quality financial education in schools, if children are not actually handling banknotes and coins, it could lead to them not being able to understand the basics of financial literacy.
The Importance of Financial Literacy
In a 2013 Forbes article, Beth Kobliner, a member of the President’s Advisory Council on Financial Capability who spearheaded the creation of Money as You Grow, stated: “Look at the mortgage crisis and how many families lost their homes — 3.9 million foreclosures. Look at the amount of money — $1.1 trillion—we owe in student loan debt. The amount — $845 billion — we owe in credit card debt. It’s pretty clear that adults don’t know much about money. To help the next generation avoid the mistakes of their elders, and to live financially fit lives, they need to be taught the essentials about money.”
WealthiHer suggests that “One of the most important jobs of any parent is to prepare their child for the real world”. Studies show parents who engage with their child’s schooling add two to three years to their education. When it comes to financial education, lessons taught at home are equally important.”
Parents as Financial Teachers
Thankfully, parents are not alone when it comes to teaching their children about financial literacy. Several organizations have published ideas and guidelines that parents can follow to help teach their kids about money, including WealthiHer and Money as You Grow.
From talking with your kids about money choices to giving them spending cash, it’s important for childrens’ financial future to begin to learn about handling money from an early age.