For Parents

How to Teach Your Kids How to Handle Cash

Your kids might get the urge to throw it in the air! Let’s not have that happen.

boy-and-girl-counting-money-in-piggy-bank

Cash is handled every second of every minute of every day. Look around you and you’ll find a customer accepting or depositing cash at the ATM, a retail attendant transacting a point of sale, a bank teller counting small bills, large bills, and everything in between. As soon as you hear “CHA-CHING,” the cash register pops open for a grocer who takes out some notes and hands someone their change. Even that dated, suit-wearing individual with the obscenely large amount of cash in his briefcase handles it and handles it well. 

So now you’ve realized your kid wants the financial entitlement of being a part of the everflowing cash handling world. 

After all, a fledgling has the self-courage and support, or lack thereof, to take flight into a whole new world of endless possibilities and boundless freedom – but yet and still, as a bird because… let’s be honest, it’s what birds do. 

If you are ready to start teaching your kid how to be a normal human being (and we get that it’s not too much to ask), but could use some parent-proof guidance, then read on. 

We will give tips on how to explain to your kids the importance of handling their cash appropriately, what smart cash handling habits they can adopt, what not to do, and how to set a good example for your kid to follow and learn how best to handle cash. We will also recommend games for you to play with your kid to teach them the basics and fundamentals of handling money responsibly. Get ready and prepare your kid for flight!

How to Explain to Your Kids the Importance of Handling Their Cash Appropriately

As a parent, you are most probably on the right track if you’re doing one or more of the following with your kid: 

  • rightfully paying an allowance
  • engaging in money conversations
  • allowing them to earn cash through hard work
  • being an example by showing them how you handle cash by saving, investing, spending wisely, donating to charity, etc (Kudos to you parents! We know it ain’t easy. We touch more on this down below.)

All of these efforts on your part help develop their regard for cash, no matter whose it is.

When it comes to showing your kid how important it is to handle their own cash appropriately and responsibly, you can decide to hand them a wad of it and observe their reaction.

You’ll notice that it’s all fun and games for most kids seeing the dollar bills pile up. 

As much of a hopeless case as it may seem to be at this point, try NOT to ask your kid these questions out loud: 

What do you do after that fleeting moment of fortune is over? How do you plan to keep your stash safe and out of your own seemingly innocent yet detrimental way?  

Instead, explain to them this:

Money is exciting to think about, isn’t it? Especially when you know you have control over what happens to it. The fate of money is never to be tossed up in the air and left for dead, or worse, to be snatched up and run off with. A better plan of action is to know where it is at all times, how it’s growing, being saved, how it’s spent, and who it’s spent on. 

*Warning: this explanation may prompt your teen to investigate whether or not their money has better chances of surviving outside of the home as well as its actual life expectancy.

To further explain why it is important for your kid to handle cash appropriately, consider sharing these reasons with them:

  • To Avoid Money Loss or Theft. No one wants to be a victim of money that is lost or stolen. Keep your pocket money safe and store the rest of your cash in an equally safe but different location.
  • Taking ‘Independence’ to a New Level. Have the liberty as a kid to call the shots about where your money comes and goes, now that you’re equipped with the proper know-how of cash handling.
  • To Be A Leader Amongst Their Peers/Educate Others. It’s secretly satisfying when you know something that others don’t,  but if the lack of knowledge on the part of others can cause financial destruction in their lives, open up and educate them on how to manage what they have, and how they can handle cash in a smart way, too.
  • Having full Control Over What Belongs To You. Power equals control, and vice versa. Enough said.
  • Being Able to GROW Your Money/Paving Way For Future Financial Wealth. Laying down a foundation early on is guaranteed to pay off in a kid’s future in the long run. And as a parent, it’s simply gratifying to be a part of.

Smart Cash Handling Habits to Introduce to Your Kids

Getting into the habit of smart cash handling means fewer losses and more gains. 

Here are some habits to introduce to your kids that are guaranteed to stick and pay off:

  • Out With the Pocket, In With the Wallet. Having the habit of keeping your money in a safe, and more concealed place, such as with a wallet, can reduce your kids chances of losing their money and other important items. No more fallen money from shallow pockets, hooray! 
  • Less is More. The less cash your kid carries around to random places, the better. They should be keenly aware that the majority of their money needs to be kept in safe and more secure environments like a money safe box or in a bank account. 
  • Save For Today, Grow For Tomorrow. When you get your kid in the mindset of saving, they start to make decisions based on what they need, rather than what they want.

What Not to Do

Are you a parent who admits to a bad habit of overspending?

Do you find yourself talking out loud about being “defeated” by money problems that you can’t seem to keep under control or overcome?

Are you afraid your money habits might run off on your kid?

We’ve all experienced feelings like this to some extent or degree. Since knowing is half the battle, come to terms with the problem that you, as a parent, are dealing with. Then decide what habits you need to drop or pick up to be an example for your kid. Knowing how best to handle money is crucial during this period in your kids’ lives. It will play a significant role in shaping their personality, habits, and pockets from here on out. Here’s a quick list of what not to do when teaching your kid how to handle cash: 

  • Overspend. Essentially, there are two noticeable types of personalities to look out for in your kid that will surface: saver or spender. Which one do you believe will be much less likely to pose financial risk?
  • Relinquish All of Their Cash. Taking away all of their funds is no real lesson to be learned. Kids need to experience certain lessons the hard way, and what better way to effectively learn from a mistake than to have been given a chance to mess up and fail to begin with. Even if it means that they lose an entire week’s worth of pocket cash AND lunch money. 
  • Give Too Much, Too Frequently. When a kids’ expectation is that they are likely to receive more after they’ve exhausted their most recent set of cash, they won’t truly associate value to the cash that never, in fact, seems to go away.

How to Set A Good Example For Your Kids

Show them how it’s done. Being an example in all areas of a kid’s life is important. The uniqueness and power of instilling valuable money habits and influencing them through your own practices help set them up for future financial stability and success.

These are ways of being an excellent example for your kid to follow and learn about handling cash appropriately:

  • Handling Your Cash in Front of Them. Allow your kids to accompany you on trips to the grocery store, to the bank, or to donation sites. They’ll get to understand how you have adopted a strategic method to spending and saving, and as a result are able to maintain your cash in such a way where money issues never come up.
  • Show Them A Day In the Life of A Grownup. Consider taking your child to work, or show them the kind of work you do from home so they can see how you earn your money for working hard and smart. 
  • Give Them Trust/Freedom/Independence. Show your kid that you believe in their ability to do the right things with their own cash. Complimenting them on the small efforts that they make towards saving and spending less will help boost their inner confidence.
  • Give to Others. Show them what it’s like to have a heart of giving by involving them in charity selection, food bank visits, and random acts of generosity. They will realize how important it is to give back to those who are unable to help themselves, and that giving is a responsibility of those who are even the least bit more fortunate than others.

Games You Can Play With Your Kids to Teach How to Handle Cash

It’s been proven that kids gain conceptual understanding and knowledge when introduced to various learning methods such as interactive gaming. Here is a list of some game recommendations for you to try geared explicitly toward teaching kids money management and cash handling concepts. Grownups are not excluded, so get in on the fun!

  • Money Bags Coin Value Game – A great starter game that introduces various money concepts through coin identification. This learning tool gets you comfortable with counting money and handling your own “money bag”. The objective is for players to collect, count, and exchange money all the way to the finish line! 
  • Spent: Can You Make It Through the Month? Game – This evocative kids’ game starts off by first educating players on the reality of what millions of people face everyday: unemployment, foreclosed homes, exhausted savings, and having only $1000 to account for (which is where the challenge comes into play). During this crucial time, the player is forced to make smart-money decisions with the cash at hand before the month runs out. The game finishes when there’s no cash left before the month ends, or the player makes it through the month with cash leftover.
  • Pay Day Game – Simple and easy enough for both parent and child to play, this interactive kids game is all about spending and saving. The goal is to get from a Payday to the end of the month. The player with the most cash and savings at the end of the game (after playing at least a month), becomes the winner.
  • Act Your Wage! Game – This competitive and fun game is sure to impress the whole family! Like Pay Day, it’s a fun way to teach your kid about handling money, with the core principle of keeping expenses low and savings high to be able to come out on top.

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About the Author

Christina Ezeagwuna

Christina is a professional writer with 7+ years in entrepreneurship, opening a rental baby furniture business in 2016 that she still runs today. Christina is a mom of three budding, financially savvy kids and works as a content manager for the Hispanic Alliance for Career Enhancement.

Last updated on: March 26, 2022