Old and new ways to teach kids about cash

14 June 2019
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One of my favourite childhood possessions was a porcelain piggy bank dressed in blue trousers, matching braces, no shirt and a tie.

Like millions of children born in the Eighties, I got the piggy bank free with my first NatWest bank account. I loved the satisfying clank of my pocket money – a pound coin on Fridays after school – as it fell on the small stash I’d already managed to save.

I’d pile in the pounds until I had enough to buy a new troll or count out the small change to buy penny sweets with my friends – or a 12p sherbet if I was feeling flush.

But a new study this week suggests that these activities, which for many of us are remembered as such an ordinary part of growing up, are fading out.

Children are now so used to seeing their parents pay with cards that physical money is an alien concept, the research from University College London found.

Researchers observed lessons where primary school children were handling change and were shocked by the lack of financial literacy.

For many of us, these skills seem so commonplace it’s easy to forget they have to be learnt.

When I discussed the issue with Vanessa Feltz on BBC London recently, she told me she remembered the moment she realised coins weren’t more valuable the bigger they were.

In an increasingly cashless society, it is not a given that children will learn these skills by necessity or example.

Some schools are stepping up and teaching them. For example, at Arkholme Primary School in Lancashire, where headteacher Joy Ingram won the Moneywise Personal Finance Teacher of the Year Award last year, four-year-olds spend time in the classroom handling coins and becoming used to them.

“At this age, the concept that each coin has a different value is quite difficult,” Mrs Ingram told me. “If you say this is a 1p, this is a 2p, this is a 5p piece and ask ‘what is the total value?’, the instinct is to see that there are three coins and to just do one plus one plus one makes three. However, a little later, the idea clicks into place.”

“When I upturned my piggy bank and nothing came out, I knew I had no money to spend”

Perhaps there will be a time in a cashless future when these skills are redundant altogether, but while physical money still exists, being able to handle it confidently remains as essential as ever.

It will be interesting to see what other effects of a move towards a cashless society – where notes and coins are totally replaced by cards and apps – has on younger generations.

We’re charging so quickly towards it and still don’t fully understand the potential fallout.

For example, I find it much harder to spend £30 in coins and notes – to part with the physical cash in my hand – than to spend it with tap of a card on a contactless reader.

Many of us are more likely to think twice before spending when we use cash than a card because of this – what behavioural economists describe as the ‘pain of paying’.

It will be interesting to see the impact on spending habits should physical cash become all but obsolete.

Similarly, as a child I knew when I upturned my piggy bank and nothing clattered out that I had no money to spend. Credit cards and debit cards with overdrafts blur the lines between credit and debt – you can run out of money and continue spending.

But cashless can also have the opposite effect.

In My Money Lessons, reader Owain Williams describes how he and his wife, Hannah have got their finances in order using budgeting apps.

The couple get notifications in real time if they overspend on any area such as groceries or eating out. They can also create as many pots as they like to save towards special things, such as holidays and Christmas – and check how they’re progressing on their smartphones.

New technology has opened up these possibilities and transformed their spending habits. Similar apps are also available for children, such as Rooster and GoHenry.

And while NatWest still offers piggy banks to its young savers, it also has an app with games to make saving fun.

Whatever the future of money holds, it seems clear that good lessons in personal finance are as important as ever, to help young people navigate through it.

In May, I helped judge our Personal Finance Teacher of the Year Awards 2019 and was so impressed by the fantastic things going on in schools all around the country – helping students understand the old ways and the new.

We can’t wait to share some of the best ideas with you – watch this space.

Email editor@moneywise.co.uk
Twitter @rachel_spike
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