Piggy banks fail at teaching money managementPiggy banks are not financially literate. They are a fun part of childhood. Unfortunately, piggy banks fail at teaching money management to kids.

Our kids are growing up in a world that uses increasing amounts of money that we can’t see or touch. We spend and receive money every day that never exists in the form of cash.

However, we continue to give our kids cash and piggy banks, neither of which prepare our kids to manage money as a number.

Why we use piggy banks

PIggy banks are part of childhood culture. Kids like seeing money. Parents and relatives like giving kids money for their piggy bank.

Piggy banks encourage what I call the “cash in hand” syndrome. Without tracking the amount of money in a piggy bank, a kid has no way of knowing how much there is without counting. This puts cash in a kid’s hand, triggering a strong desire to spend!

Rethink allowances

Parents need to think outside a piggy bank. In doing so they can find ways to help kids learn to manage money in a real-world setting. 

Using a guide like The No-Cash Allowance can help parents teach their kids to manage money as a number. Children have a hands-on money management experience at home at no extra cost to their parents. 

A no-cash allowance is a system in which a child controls all funds received from parents through a written account initially kept in the home. Adults act as bankers and the child as account owner. 

money is a number

A no-cash allowance teaches money basics.

  • Depositing allowance, earnings or gifts always makes the number bigger. 
  • Spending money always makes the balance smaller.
  • Numbers never lie so it is always clear who got paid and when.
  • Decision-making about money becomes a routine and regular experience for kids.

Start with a better allowance system

  1. Read my book The No-Cash Allowance or create your own allowance tracking system. It is essential that kids learn to record every money transaction and that the account be in writing or printable.
  2. Discuss the allowance plan with your parenting partners. Consider this as an educational activity that has consistent rules. This is more about parenting than financial expertise.
  3. Determine a regular amount for each child. Decide what additional earning opportunities to offer. Add spending responsibilities so a child has to balance spending for both fun and necessary expenses.
  4. Meet regularly with kids to discuss and review spending history and future plans. This is why a written or printable account is so important.
  5. Be prepared to learn with your child. There will be many changes to how we use money in the years your children are at home. Consider this a great opportunity for you to have money conversations over the years.

Parents can help children understand that each money decision affects their total money resource. Kids need to see that there is a bottom line. By setting up a system as explained in my book, The No-Cash Allowance, your kids will learn that managing money is all about making decisions.


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