Daily Management Review

Children, education and the ethical issue in a cashless society


Cashless payments are on the rise, and children have less opportunity to hold physical money in their hands. Banks issue cards for children, and you can easily find an application to track your kid’s payments on AppStore or Google Play. However, electronic piggy banks come at a cost. Cashless payments affect how children perceive the source of income and what they think about savings. They also deprive kids of important communication experiences, and these effects may have an impact in the future.

One of the first questions is the symbolic value of money. Essentially, coins and banknotes are only objects, and their only value is that we think they are valuable. As adults, we understand this, but what will happen if we remove the physical embodiment of money from daily routine of our children, and offer only abstractions instead?

Of course, the tooth fairy with a bank card hovering over a card reader hidden under the children's pillow looks ridiculous. However, as much as children love abstract things like fairy tales, they cannot link an abstract concept to reality without a physical “mediator”. That is why children in elementary school are offered problems like “John had six apples, and Mary had nine.” Concrete and real representation is necessary for development of numeracy, and cash is just a perfect intermediary in the case with finances.

One of the important tasks is to explain where the money comes from and that it’s not endless. We can easily show the amount of money in the wallet when we have cash in it, and give a banknote or a few coins for the work done. When a child sees how the amount of money in the wallet decreases with each trip to the store, or watches a piggy bank gradually filling with earned money, he understands the concept clearly. In contrast, figures on a smartphone screen mean nothing, since it is difficult for most children to imagine even a thousand of something.

Jann Gumbiner, Ph.D., a licensed psychologist and clinical professor at the University of California, explains : “Cash is concrete and finite. Young children actually believe that ATMs print money and that the flow is unlimited. They do not realize that money represents their parents’ long hours and hard work… [Kids] understand tangibles better than abstractions.”

In addition to physical presentation, cash carries a different, emotional meaning. Bills and coins teach children responsibility – just remember how you lost money for the first time. Finders keepers, losers weepers, and the next time you probably were much more cautious. Also, cash has a profound social meaning: when a child throws a coin to a homeless person, he learns to give; when a child counts coins at the store counter, and the seller waits patiently, the child learns to be confident; when a child sells something at a school fair, and then immediately buys something for the same money from his classmate at a booth next door, he sees how society interacts.

As much as community needs finances, as children and parents need cash. Statistics confirm this: even in Australia, one of the most cashless countries, more than 70% of parents continue to give their children cash, rather than to transfer money to their bank accounts. Coins and banknotes help explain to children how money works, and carry a deep symbolic meaning in addition to their financial value. 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.