It all started when my girls got “gift cards” as birthday presents from well-meaning parents of boys. (When we started inviting boys to birthday parties, boy’s moms were as confused as I usually am when we are invited to boy’s parties — what to get? Gift cards are the easy answer.)

Gift cards are hard for kids to understand. They just don’t look as valuable as money and so they are treated as less valuable. Many gift cards go unused or partially used by kids because they often forget what the stored value is that remains on the card. Rather than risk looking embarrassed at the local Starbucks as they try to pay for a friend’s drink, unsure of how much value is left on the gift card, they often throw away the cards they have partially used, tossing money along with the card.

Money is abstract. Plastic money is very abstract. To help kids understand money, you have got to make it concrete. Let me give you another example. Just last week, after our youngest, Amanda, got herself out of her — wait for it — $250 iTunes debt — yes, you read me right — she immediately sank another $25 into the music hole. I was incredulous. Now, I KNOW that if she had to peel 25 singles off to pay for these new tunes, she would have hesitated. But she didn’t — she used her plastic — her debit card.

How do we as parents get in front of this spending train wreck? Keep kids in a cash environment as long as you can and even when they graduate to plastic, keep some cash in their lives. It’s a good way to keep money real — three dimensional — so that they continue to practice the skill of delayed gratification that cash gives them the chance to do. With cash, kids reflect.

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Susan Beacham
Written by Susan Beacham
Susan Beacham founded Money Savvy Generation in 1999 after almost two decades in private banking and investment management complemented by considerable time teaching at the elementary level.

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