Motley Fool Money - 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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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. When you use 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, 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 a credit card, even if you have a good kid and you say,

well, don't spend more than $100. 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.