Motley Fool Hidden Gems Investing - The Case for Giving Your Kid Cash

Episode Date: December 22, 2020

Are digital payments on the rise? Yes. But if you’re looking to teach your kid about money, best-selling author Beth Kobliner shares why handing them cash can help make the lessons stick. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. With The Motley Fool Money Extra, I'm Chris Hill. Beth Kobliner is the author of the New York Times bestseller, Make Your Kid a Money Genius, Even If You're Not. One of the things I like about this book is it includes practical tips for parents as well as some unconventional wisdom, like using cash. I know we're living in a world that is increasingly moving to digital payments, and I'm not suggesting that trend will or even should reverse. But if you're a parent trying to pass on lessons about money, Beth makes a pretty compelling case for every now and then handing your kid a big wad of cash. MIT showed that when you use plastic, you basically are

likely to spend twice as much than when you use cash. You use a debit card, credit card, plastic, it feels like fake money, and you spend twice as much. Also, you know, if you give a kid cash, you give them $100, say, for you can buy, you know, extra stuff for school or whatever it is, for clothes or whatever that budget is, and they go to the cash register and it's $101, dollars, they're going to have to put something back. There's that experience of, I don't have enough money. Whereas if you give it, you hand over your debit card or credit card, even if you have a good kid and you say, well, don't spend more than a hundred dollars. If it's $110, nobody's going to say anything. So it's important to give kids cash. So they experience the idea that money

is a finite thing. And I think it really does give kids a grounding in literally the value of a dollar by seeing the dollar. I'm Chris Hill. Thanks for listening. We'll see you next time.