Teaching Kids to be Financially Savvy in a COVID World and the Digital Future

The COVID-19 pandemic upended economies and communities worldwide, and unfortunately, the financial implications stemming from the outbreak are expected to last for years as unemployment numbers rise and markets continuously fluctuate. On a personal level, the coronavirus has made it difficult for many parents to maintain a sense of financial normalcy in the home. In fact, according to a recent Pew Research Survey, one-in-four adults in the U.S. have had trouble paying their bills since the start of the coronavirus outbreak.

While moms and dads have worked hard to make ends meet and disguise any financial turbulence over the past several months, their childrens’ brains are like sponges, and they are picking up on money management habits intuitively. In fact, according to behavioral research produced by experts at Cambridge University, kids start grasping basic money concepts by age 3, and by age 7, many of their money habits are already set. Then, as they grow into young adults, children continue to learn through their parents’ examples as well as outside influences, such as media and friends.

While it’s always important to teach children about making good economic choices, it’s especially critical during economic recessions like today’s, as such an impressionable time in their lives will shape how they spend and save money for years to come. Doing so in today’s digital world, however, means parents must go beyond piggy banks and coins to teach their kids about money management. Instead, they should encourage today’s digitally native youth to manage everything from their allowances to their first paychecks where they already spend 30% of their day -- on screens.

Making Digital Dollars & Sense

Digital money has rapidly overtaken cash in recent years to become the main way that people hold, spend and send their money on a global scale. Unlike their parents and grandparents, learning to manage money digitally should come naturally to youth, as they’ve grown up in a world filled with websites, gadgets and apps. Digital tools, like mobile apps and educational games, can help instill financial literacy and build a solid foundation in money management concepts before reaching adulthood.

Below are ways that parents can introduce technology in order to teach kids - from toddlers to teenagers - positive (digital) spending habits. 

The Early Years: Introducing Essential Money Concepts

It’s a good idea to start introducing kids to basic concepts around money as soon as they start counting. This will help them both to understand that numbers have important applications in everyday life, as well as making them comfortable with the concept of money at a young age. One tried-and-true method for introducing the transactional nature of money is to play pretend grocery shopping where the child can act out the process of purchasing items from a store clerk. To add a digital component to this exercise, instead of using paper money at the make believe register, parents can encourage children to reenact the “tap to pay” action that occurs when using digital wallets.

Adding Up to Success for Adolescents

A major part of the learning process for children - particularly from a young age - is making education fun. This is best done by creating games-based scenarios, which will bring an extra layer of interest, engagement and competition to the learning environment, and help distinguish the exercise from schoolwork. Similar to how previous generations learned from classic board games like Monopoly, digital games, like Peter Pig’s Money Counter and Wise Pockets, gamify the money management learning process via smartphone apps and computer games.

Teaching Teenagers Money Management with Tech

By the time children reach their teenage years, they often crave independence. Many of today’s banking apps and digital money wallets give teenagers the power to make their own decisions, which is crucial for their financial development, while also allowing parents to keep a watchful eye over their financial activities. Not only will digital money wallets and platforms teach young adults to be savvy in today’s world, but they will also give them a leg up in the future, as the number of digital banking users will exceed 3.6 billion by 2024; a 54% increase compared to 2020.

As the world continues to embrace the shift to digital money, there are now numerous fintech platforms that make it easy for kids and young adults to develop their own knowledge, attitude and positive behaviors towards spending and saving. However, to truly instill smart digital money management habits to children at a young age, it’s essential that parents adapt and adopt this new way of managing money, too.