Cash or card?

If you’re giving your children money, whether it’s for birthdays, pocket money, or for doing chores, you have to decide whether to give them cash or a card. There’s no right answer to this question, but here are some factors to consider.

What do they see you doing? If you predominantly use cards or digital payments, then a handful of cash might seem unfamiliar or less significant to your child. On the other hand, the tangibility of cash can be crucial for some children, as being able to physically handle the money may better help them grasp its value and understand the concept of money management.

How are they keeping track of their things? Both cash and cards come with risks, such as theft or loss. However, cash is particularly vulnerable because once it's gone, it can’t be retrieved. Cards, depending on the provider, often offer some form of protection or cancellation options, making them potentially safer in the long run.

Where are they spending their money? The acceptability of cash versus card can vary greatly depending on the venue. Some places, especially newer or more technologically advanced stores, may not accept cash at all. Conversely, there are still locations that don’t accept cards or charge extra fees for card use.

How old are they? The appropriate age for starting to use a card can depend on what financial products are available. There are numerous card options designed for children and teenagers, each with different age requirements and features. Some cards are suitable for children as young as six, while others are targeted towards older children or teenagers.

How much control do you want over their spending? Cards can come with parental control features that allow you to set spending limits, block certain types of transactions, or monitor where and what your child is spending on. Cash, by contrast, is much harder to track and doesn’t offer the same level of oversight.

What does your child prefer? Ultimately, your child’s preference is significant. Engaging them in the decision-making process can enhance their motivation to learn about financial responsibility. For example, at The Hoard Book, we thought our oldest would be thrilled with an app and a card when he turned seven, but he preferred sticking with cash.

Considering all this, it's essential to weigh the benefits and drawbacks of cash versus card carefully. Cash may be the better choice for younger children who need a more tangible form of money to understand its value. For older children, especially those who are tech-savvy or frequently make purchases online, a card might be more practical and safer. Regardless of the choice, the key is to ensure that it aligns with your family's habits and your child's maturity and needs, facilitating a better understanding and management of money from an early age.