We’re fast becoming a cashless society. Many of us pay for our shopping with debit and credit cards and check our balance on our mobile phone. While it’s quick and easy for us, it can be tricky for children to understand that we’re spending real money.

Learn how digital money works

It’s worth taking the time to explain digital money, so they understand that you’re not getting things for free when you make a cashless payment. Even very young children can learn about how digital money works.

You can start by explaining the basics, such as:  

• digital money is a way of paying for things without using cash
• you can pay with your phone, card or watch
• phones have an app on them that connects to your bank account (show them the app on your phone)
• cards take money out of your bank account through a card reader (show them next time you use contactless)
• your bank account is where you keep your money
• you can also use an app to move money from one account to another and pay for things you buy online.

Spend a gift card together

Another way to show children how digital money works is by spending a gift card together. Because gift cards only have a set amount of money on them, they’re a really useful way to teach kids that once they’ve spent the money, it’s gone. 

It also gives them the chance to:

• make decisions about how to spend their money
• decide whether they want to spend all their money at once or save some - you can show them the balance on the card and explain how much would be left after they pay
• use an online checkout by entering the card details.

Get money out of a cash machine

Next time you draw cash out from a cash machine, talk your child through what happens:

• explain how you keep your PIN safe and why you don’t tell anyone your number
• tell them how much you’re getting out and show them the notes
• get a receipt so they can see your balance go down.