Cashless living is becoming more and more common for Americans. According to a 2016 Pew Research study, 24% of Americans do not make purchases with cash during a typical week. That number is set to increase with the growing popularity of cashless payment via Apple Pay, Paypal, and Venmo, among others. It is not unusual for millennials to split a restaurant bill via Venmo, rather than bringing cash and producing exact change or asking the waiter to split the bill into individual tabs.
In 2013, all cabs in the District of Columbia were required to install credit card readers, as cash payment became increasingly undesirable. Music festivals, popular among millennials, have started implementing cashless payment - in 2017, Firefly Music Festival in Dover, DE (which attracts as many as 90,000 attendees) partnered with several different credit card companies as well as Apple Pay, Android Pay, and Samsung Pay to offer cashless options. This year as well, the Austin City Limits Music Festival (ACL) went entirely cashless and no longer accepted cash payment, instead asking attendees to hook up their credit card to their wristband and pay by the swipe of a wrist.
We have previously written about how many parents do not discuss finances with their children. Forbes wrote that 83% of affluent parents do not mention money matters with their children. In addition, as society increasingly gravitates to cashless-based methods of payment, instilling the value of the dollar may become even harder for parents to do.
For parents, the switch to cashless payment means they must reconsider how they teach their children about money and how to begin creating wealth. 20 years ago, a child might have received a cash gift from their relatives. Now they are receiving gift cards. School lunch accounts can be refilled digitally. Paper currency and hard coins may become relics in the near future. But the “tangibility of feeling and handing over cash to somebody feels very real,” said Robin Taub, author or A Parent’s Guide to Raising Money-Smart Kids and originally quoted in an October 15th, 2017 article in USA Today. “That sense of loss which is hard to replicate when you’re using plastic. You just don’t feel like you’re losing it or spending it.”
A solution is to talk money with your children. Make financial planning discussions a regular part of your family life. Providing a weekly cash allowance (anywhere from $1 to $20 depending on the age) can introduce in a small way the idea of handling regular paychecks. For older kids, you may take them to the bank to open an account with the cash provided. If you put the account in their name, it may encourage them to take ownership of the account. You may teach them the 4-Bank System, encouraging them to split their money among four “bank” jars - spending, saving, giving and investing. If they wish to spend their money impulsively, then you may share a story with them where you resisted buying something impulsively in order to save for something important.
Discussing financial matters with your family is important. To learn more about how to facilitate such discussions, please contact firstname.lastname@example.org or call us at 515-557-1860. TABER Asset Management is a fiduciary based investment management and advisory firm located in Des Moines, IA, offering a full range of financial services to clients across the U.S.