Why I stopped cash handover

Parents who don’t hand over cash aren’t mean, they are just keeping an eye on the future, writes Anthony Keane

MY kids haven’t been given cash pocket money for years. It’s not because I’m an evil father – who loves Darth Vader music – wanting to choke their financial freedom. It’s because most of their financial transactions, and the future of money, is digital or on cards. Their snacks at school are bought using a prepaid card. They buy apps and music using their digital devices, and shopping for clothes, books and other goodies is usually done with gift cards that were birthday presents. They’re 12 and 11 and, like most kids today, are growing up as physical cash is in its death throes. So why give pocket money in a form that may be effectively extinct soon? The rapid rise of micro payments and tap-and-go is speeding up cash’s decline. Using physical coins and notes is a great way for young children to learn about money and maths, but once they get their head around how money works, it may be wise to pay at least some of their pocket money in digital form. The benefit in our house is that there’s never a big pile of cash in kids’ money boxes or burning a hole in their pockets. Instead it’s in online savings accounts that deliver bonus interest and they get to watch it compound and grow over time.

The “out of mind, out of sight” strategy is great for adults too when it comes to saving or investing .

Automatic transfers to a specific bank account or investment fund – before we get a chance to spend it – is a proven way to get richer faster.

Children and money will be in focus in the coming days as Global Money Week kicks off today. It’s a financial literacy campaign that runs in 137 countries and aims to teach children better money management skills, with more than 30,000 Aussie students are expected to take part through schools or community groups.

Global Money Week national ambassador Marissa Schulze said financial professionals saw adults every day struggling with money management and its stresses.

“Seeing this is a huge motivator for wanting to make a difference and help to install the right skills, knowledge and behaviours in children from a young age,” she said. “Many young Australians fail to get the financial literacy education they need from their school or parents.”

Ms Schulze said paying pocket money in digital form was a good idea once children became confident with money.

“Around nine or 10 is probably the right age,” she said.