Paying with Cash Can Help Your Child Understand Money

The concept of money can be tricky for kids to understand, especially when everything is done online or with a card. Paying with cash is an excellent way to give kids a tangible way to understand just how much things cost.

Before your Paying with Cash Day, let your child know that you’ll be having a day where you’ll pay with cash for everything. Explain to your child that you want them to have a good understanding of how much things cost, and you realize that’s hard to do when you always pay for things with a card, regardless of how expensive or cheap they are.

Ask your child if they have a preference for what day you have as your Paying with Cash Day. Will it be a school day where you might have to fill the car up with gas or a weekend day where you head to the movies or the grocery store?

You need to have an idea of what you’ll be doing to estimate the amount of cash you’ll need for your day. If you have a budget for these things, your job of estimating will be easier as you’ll be able to just stick with the budgeted amount.

Once you have this figured out, let your child know the different things you foresee doing that will need to be paid with cash. Grab a piece of paper and create three columns by making two lines down the page. Write down the different errands or outings along the column on the left side of the page.

Then ask your child how much they think each errand/outing will be. Write their guess down in the middle column. If grocery shopping is one of the outings, talk with your child about the number of things on the list and what items they are. A shopping trip can vary greatly, but if you go over your list with your child, they’ll have a better chance at coming up with an estimate.

Once the day is done, you can go back over your list with your child to write down the actual amounts in the right column and see how close your child was to the actual amount of cash used. This exercise will really help them process the day and see how close they were. Regardless of how close or far they were from the actual amount, they’ll remember and might even try to guess the total cost before you head to check out the next time you’re out.

Now it’s time to head to the bank with your child. If you have time to do this at the start of your Pay with Cash Day, great! If not, it’s okay to go to the bank ahead of time. Just make sure your child goes with you. Let them see and hear you take out the amount of cash you determined you’d need.

They may be surprised by the amount you withdraw. Ask the banker for one of their cash envelopes. Write Paying with Cash Day on the outside of it so that everyone in the family knows what the money is for.

Then, head out for your day and enjoy. When it comes time to pay, you can even have your child count out the cash and get experience figuring out how much to hand the cashier and receive the change back, if any. For another way to teach your child about money, see 2 Easy Ways to Teach Kids about Money.