Why your children will struggle to manage their money
Children think paying for things is simply about waving our phone around, but what's this doing to their perception of money?
In Never Stop Learning this week I will be covering the following 1-2-3:
One Big Thing - Helping your children appreciate the value of money
Two Recommendations - A guide to using AI for useful things and a run down of a great book
Three Actions to take this week
One Big Thing - Our children are getting a warped view of what money is
The shift away from cash as a primary method of payment began before the COVID-19 pandemic, but it certainly accelerated during that time. Nowadays, it seems like cash transactions have become quite rare. In fact, the only cash we spend in our household is for our child's English tutor. Even the kebab shop surprised me last week by offering card payment!
But that’s ‘s about it!
Everything else is just a series of taps on our phones or cards before we walk out of a store with our purchases.
However, this convenience raises concerns about how our children perceive money and its value.
How can they understand the cost of things when all they see is a quick tap on a screen?
Despite their young ages, our 9 and 7-year-old children see us working long hours on computer screens, communicating with countless people online.
But what is the purpose of all this work when we can just enter a store, tap our phones, and leave with whatever we want? Do they really understand that there’s money leaving a bank account somewhere on the internet and flying at lightspeed to another account so that we can remove those items from the shop?
To counteract this potential lack of understanding, we strive to instil a strong work ethic in our children and engage in open conversations about money and its value. It's crucial that they grasp the concept of earning money and the importance of spending it wisely.
It’s good for children to see how much things cost and have conversations about that
We make an effort to discuss the cost of various items, ranging from big-ticket purchases like houses to everyday expenses like dining out.
When we go out for dinner, I always ensure my children know the total cost of the meal. We talk openly when the receipt arrives and what each item cost.
This helps them develop a sense of the value of money.
Ultimately, it's essential to build their understanding of money and its hard-earned nature. We want them to appreciate the value of what they buy and the effort required to earn the money that funds their purchases.
In a world dominated by digital transactions, I believe that teaching our children about money and its significance is more important than ever.
So, I think we need to be careful.
The concept of holding physical money
Without the ability to actually hold the money in their hands its tricky for children to visualise what money is or how much things are. And, the concept of only being able to spend that money once is so important.
We also still strive to ensure they have some pocket money as actual money. This gives them the physical feeling of having to hand that money over to someone in exchange for something tangible. Alternatively, you can show them a number on your phone screen but that’s really not going to mean much to a child.
Should children be paid for chores?
The other area I’d like to cover is chores and whether you should pay your children for doing them?
We haven’t gone down this route yet. At the moment, we are pursuing a rather utopian vision of them helping out because they want to! I know, good luck with that I hear your say.
It’s working with mixed results at the moment.
The downside is really that it feels we need to resort to “guilt tripping” sometimes to make things happen. That doesn’t feel like the best way.
The alterative is to go down the route of paying for chores and making them earn any pocketmoney they get. I can see the benefits of this. ie allowing them to reap the benefits of their labour and get used to the notion of swapping time for money (if that’s healthy? One for another day probably). But, does it make a family environment too transactional?
Can technology come to the rescue?
As your children approach early adolescence there are also new technologies to get accustomed to as a parent. That’s a stage we haven’t quite got to yet but I can feel it approaching.
Banks are now starting to offer cards that parents can load money onto. These give the child some feeling of spending without the cash but its still not quite the same in my eyes of that physical thing you hand over.
Go Henry is one such example which you can see by clicking on the picture below (no affiliate link).
At Go Henry they offer features such as the ability for parents to pay for chores through the app. What do you think? Is this healthy?
It’s a tricky one to navigate
You can see I’m grappling with this topic rather than giving you definitive actions to take this week. I hope this debate will be useful for you. I’d be very interested to hear your experiences on what has worked and not worked with your children and teenagers.
What do you think? Have you navigated this issue with your children? What’s worked for your family?
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Two Recommendations - what to consume this week
1. How to use AI to do practical stuff: A new guide
In his recent post,
explores some practical uses for AI. From writing and images to now even recording videos, AI can be a great tool to help us.In fact, I recently had a conversation with Chat GPT about mortgages and what we can afford to spend on a new house. It was really useful.
2. Why you feel lost in your career, Ali Abdaal
I’ve talked before about how much I enjoyed
's book, The Pathless Path but here's a really great run down of the book from one of my favourite YouTuber, Ali Abdaal. You can purchase the book here.Three Actions To Take This Week
My vision for this newsletter is to provide you with weekly actions that you can take away and use in your life in the coming week. So, here are three things you could try this week:
Schedule a team meeting to introduce ChatGPT and its potential benefits. Share with the team how it can help them with their daily tasks and increase their productivity.
Have a go at using ChatGPT for a basic work task such as writing a letter or email. Sign up here.
Try out Substack’s new Notes feature - so far, I’m pretty impressed. Just a nice antidote to Twitter so far. Like it.
Here is one of my first posts on the platform which I used to give people a view of what I’m writing about this week. Why not join me there and try it out.
And… to get the latest post each week please don’t forget to hit subscribe
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It helps more than you know. Thank you!
An interesting article and one that should resonate with parents. In fact, it’s something we should all consider.
The credit card industry relies on people not knowing how much they are spending!
I try to put purchases into a time value. If someone earns £10 an hour after tax and stoppages, we can use that to work out the value of an item.
For example, if we want to buy an iPhone at £1000 that requires 100 hours of work. A coffee at £3.50 will take over 20 minutes, longer than the time to drink it!
If, as a parent, we are blessed with a high paying job, then, on behalf of our children still work on lower wages as though they we’re starting out in life.
To be honest I'm in the works of navigating it with myself my daughter is 30 years old and she's doing okay so I taught her pretty well but I'm just did a remodel in the middle of a pandemic and a recession I don't know what I was thinking but I really enjoyed your article thank you there's a bunch of good stuff in there they bunch