Technology has become an integral part of the world we live in today, and as a result, children are growing up digital. As much as it’s important to equip them with the necessary skills to adapt in a quick-transitioning society, what if we’re missing out on an even more important role – that of promoting a child’s learning ability?
Research conducted by University College London revealed how children ‘are unable to work out change’ because of the prevalence of card payments, the Daily Mail reports. In the study, researchers were left shocked when they discovered children’s lack of knowledge in handling money. Their findings during the class observations in primary and secondary schools revealed that half the class experienced ‘significant difficulty’ because they were ‘unfamiliar with the use of coins, different combinations of values, or of the notion of change’.
In Australia, the not-for-profit Financial Basics Foundation has concluded that students are also struggling with financial literacy. Results from a 2017 survey show that despite 85% believing that they have a good understanding of how credit works, their responses to some basic questions were off target. Over 50% are convinced that it takes only three years to pay off a $2,000 credit card debt at an 18% interest rate; when in reality, it would take over 15 years! Furthermore, one out of three respondents believes that there is “no interest charged on outstanding balances at the end of the interest-free period” (Kathy McLeish, ABC News). Even Natalie McClatchey, teacher of financial literacy at Mansfield Sate High School in Brisban, said that her own children believe groceries are free when they are paid with tap-and-go.
A growing number of countries have stressed that moving towards a digital-only society would affect us all – particularly the unbanked, underbanked and the elderly – but less attention has been given to how kids are adapting to a culture less inclined to using cash. It’s unfolding to be an alarming trend with children as young as three have parents replacing traditional pocket money with digital piggy banks, the Telegraph reports. While in the US, a quarter of its population belongs to the so-called Generation Z and are less familiar with cash, choosing to make purchases using credit cards. Donnel Briley, professor of marketing and behavioral psychology at Sydney University confirmed that “there’s good empirical evidence that people spend more money when they don’t actually have to use cash, and that goes across different alternative forms of payment.”
In response to this growing concern, a British startup released a digital pocket money app which parents are turning to for their young children who can’t open a bank account. In China, teens can hold accounts through mobile payments such as Alipay and WeChat Pay while Hong Kong offers a kid-friendly version of its stored value Octopus card. Gone are the days of old-fashion piggy banks as globally, contactless payments are making its way into children’s pockets. As innovating as it may be, it still doesn’t negate the fact that the value of cash instills value in children. According to the Daily Management Review:
“How well we explain to our children the value of money and their role in society will affect our lives a few decades later – when they will be in charge of the financial system. And that is why it is worth thinking twice before fully rushing into a cashless society with our kids. And in addition to the educational value of cash, no bank transfer or contactless payment can match the joy we experienced as children when our grandmother or godfather slipped us a banknote in the pocket with a wink of the eye.”
Daily Management Review, 2019