Kids need real dollars and cents to learn money sense – don’t digitize their pocket monies

“The financial habits you develop when you are young are going to go with you into your adulthood.” – Warren Buffett

The “invisibility of money to young people” is one main factor exacerbating the problems that young people have with money. – Founders of Money Doctor, Nicky Reid and Marilyn Holness, quoted in ST

I read with some disdain the news of POSB introducing digital watches that basically act like prepaid debit cards for kids in certain primary schools. It allows students to buy food and stationery at the canteen and school bookstore by tapping the gadget on NETS digital payment terminals. They can also use the watch at such terminals outside school.

The initiative has been rolled out to various primary school levels at 19 schools, but the bank aims to get all students from all 190 primary schools here to own this gadget within the next two years.

But would you seriously considering giving such a “debit card” to your 8-year old? Albeit this smartwatch would have a safe daily limit of say $2 a day. But still…

I know countries around the globe are moving towards a cashless society, and cashless generally means greater convenience, and less hassle of carrying cash that can be physically lost or stolen.

Through an app that parents download onto their phones, they can track their child’s spending (and saving), and also send their child money in the event of an emergency.

But honestly, I think if we are talking about young children who are aged 7, 8, or 9, who are just getting a grasp of money matters, it is best to stick to the devil we know – real, tangible, countable cash.

Here are my 4 key concerns about this initiative.

1. It will create a “buy first, think later” culture

Because all you need to do is flash your watch and receive an item, it makes it all too easy to buy things and worry later.

We all know (even as adults) that it’s hard to curb spending with cards. Which is why as financially savvy adults, we choose to limit the number of credit cards we hold and have a clear reason and purpose for every card that we do choose to apply for.

As it is a digital medium, the concept of money is made more surreal and less tangible, which makes it harder for young children to fully grasp the concepts of spending within your means, budgeting, and saving, although the programme tries to sell these things.

Everything is reduced to mere numbers on a screen.

Instead they may learn that there is no need for delaying gratification, since you can just buy things so easily and without much thought.

Mary Hunt, author of Raising Financially Confident Kids, has this to say when comparing cash and debit/credit cards, “Cash is very visual, clear cut and not confusing…Credit sends a mixed message to kids.”

2. It takes away one of the most natural places for kids to practise money management

The school canteen /bookshop is one of the safest and most natural places for kids to learn about money –

  • counting (Did I bring enough for a bowl of noodles?)
  • budgeting (If I get an extra drink today, how much will I have left for tomorrow or day after?)
  • differentiating between needs and wants (Do I really need that new rainbow-designed pencil?)

It also provides real-life opportunities for them to practise life skills such as checking the change, making sure that it’s right, and if it’s wrong, to be able to speak up and tell the truth. (With the digital watch, there’s no need for change.)

We give our eldest a weekly budget of $8-10. She’s expected to manage her budget on her own – in other words don’t go buy some fancy pencils on Monday and expect us to give you extra money on Wednesday when you’re left with nothing.

If she overspends, she will have to figure things out on her own – maybe go hungry, or buy something of lower value, or pack a sandwich for recess on Friday.

With all this daily practice, I’ve noticed her becoming more aware of the money that we spend as a family. One day, when I got charged for an extra cup of tea that I didn’t order, she was able to pick it up on the receipt, and I was able to ask for a refund.

With the smartwatch, it may become too convenient for parents to come to the rescue and top up a zero-balance account electronically. (Let’s face it, even if you don’t want to bail your child out, the temptation is there, at a click of a button.)

It thus makes it harder for children to learn through experiencing the very real consequences of money-related mistakes that they make.

As Hunt also says, “It’s important [that children] make choices and then live with the consequences.”

3. Is this going to be another digital distraction?

I’ve heard stories from my daughter about friends owning new gadgets like a smart watch. She says her friend sometimes gets into trouble for playing with her watch in class. It is a distraction to her and her friends sitting close by.

We live in an age of digital distractions. A child at lower primary levels is not likely to own a phone, but also for good reason, since they are not going to be travelling about on their own.

Alone the same lines, why give them a smart watch that will serve as a distraction, as the latest cool gadget in town, and as a means of comparing between the haves and have-nots?

Will it not distract them from the real meaning and purpose of school, which is to learn, to practise life skills, to socialise, and to curb impulsive behaviours?

4. Are there going to be safety issues with money flowing so easily to your child?

This may sound extreme but imagine if your child finds himself in the situation where he is being extorted for money or for an expensive item at a bookstore outside school.

Of course the daily /weekly allowance limit won’t be set too high, but if he’s being forced and he calls you for help, the parent may try to send him the money he needs on the spot, just to bail him out of trouble.

It’s potentially tricky to navigate such unexpected situations. Also the issue of privacy regarding spending habits that are tracked electronically is always lurking in the background.

learning money sense with three piggy banks - spend, save, share


We treat financial literacy training with our kids quite seriously.

As mentioned earlier, we choose to give a weekly allowance, so as to give my daughter a chance to exercise choices and learn responsibility.

We also make sure they have a bit leftover for the practice of saving. This goes into 3 piggy banks – for spending, saving, and sharing.

The “spending” bank is to allow the kids some freedom to exercise choices. We try to discuss with them and help them make better decisions by weighing the pros and cons of buying a small toy now versus waiting a month later for the money to grow in order to buy a more valuable or higher-value toy.

We dissuade them from impulsive buying behaviour, and try to verbalise our own money decisions and dilemmas, so that they learn from us.

The “sharing” bank is to encourage the kids to share in terms of buying small treats or gifts for their siblings. It is also for giving to the church or to communities in need.

The savings go into their individual savings fund. At the end of the year, we tally the total, and put them into their own fund. (This is the equivalent of a savings account except that the money isn’t physically with the bank, it’s kept as part of our family bank account. But the concept is the same, they get to practise and see us tally their money at the end of the year, and they know that we’re safekeeping it for their future.)

I’m sharing this because financial management is probably one of the most important life skills and gifts that we could ever give our children.

The money habits they form now will likely follow them through life.

Just look around at those with burgeoning credit card debts or finance-related troubles – “money no enough” is one of the top destroyers of families around the world.

I understand the beauty of hassle-free technology and conveniences that it brings, but in this case, I think it only benefits the markets and companies involved, not so much our children. So please, please leave our kids’ pocket monies alone.


Yes, not opting for this smartwatch may mean slightly longer and slower queues at the canteen. But the upside then is our kids get to exercise invaluable life skills of

  • patience (why so slow…)
  • prioritisation (I want to pee but I’m hungry, hmm quickly get food and then go to the toilet)
  • flexibility (Wah, chicken rice queue so short today, let’s go for it!)

Yes, it means that we have to scrape together small change for our kids every week. (I like to give my daughter a mix of $2 notes, and various coin denominations, in order to teach her to count and manage her own daily budget.)

Yes, it means that our kids may accidentally lose that $2 note on an odd day or two, but then they get to exercise problem-solving skills and initiative by asking a trusted teacher or friend to help.

When it comes to technology and kids, we need to proceed with caution and think about the cost.

What price do we as a society pay in the end?

Are we letting go of precious opportunities to hone life skills and money wisdom?

Will we raise a generation of children who think that money runs on tap and it’s easy come, easy go?

Like how we are so reliant on our smart phones and can’t be bothered to use our memory to remember phone numbers. Or when we rely on calculator or excel spreadsheet to tell us what the answer is, and avoid doing mental calculations on our own. Will our kids not learn or bother to count simple cash anymore?

Precious opportunities to hone life skills are lost when we rush into technology recklessly. As Dr Nicky Reid, founder of Britain’s Money Doctor, said in this ST article:

“As parents, we always want to make things better for our children, like giving them everything. But as we become more affluent as a society, we are not giving them that life skill.”

I hope that we will take the time to think first, and weigh the pros and cons, before we embrace and adopt smart technology like this.

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  1. Melissa Anne says

    Great article, June….. all that you’ve mentioned are what I believe in as well.
    Our children are being digitised by everything and, as parents, we should be their gatekeeper, and ensure they grow up with the right values.

    I’m glad to see that I’m not the only one with these sentiments… let’s hope more parents feel the same way too.

    • June says

      Hi Melissa! You’re right, we need to be gatekeepers, and sometimes it’s so hard because the technology and its promises are shiny and promising. I’m not saying that all tech is bad, but we really need to first discern the new technology for what it truly is, and weigh the pros and cons.

  2. says

    Same sentiments as you, which was why when my son came back to me with the option of letting him try out the program, I decided to forgo that option for him and told him using real money to buy food is a way for him to learn about money management.

  3. says

    This article by June is spot on with respect to what are the effective means of educating kids financial capability. There are no substitutes, in order to form positive money behaviors, kids must begin engaging with real money as early as 3 years old. Electus Global Education Co. has developed the most advanced technology for youth financial and entrepreneurship education called the Life Hub Learning Center and its based on early engagement with real monetary assets for positive behavior formation by their teens years.

  4. says

    I’m totally with you! Our kids can use their ezlink cards to buy stuff in school too, but I think it’s really important they handle money at their age. Also, my eldest keeps forgetting where he puts his wallet (at home, and not say our house is very big?!), so I feel that he needs to learn more responsibility too. I’ve also always felt that it’s easier they handle and make mistakes with money now, better you go “bankrupt” at 10 than at 30.
    MummyEd recently posted..Theo10My Profile

    • June says

      I didn’t know ezlink cards can be used, maybe it’s just for some schools. Haha, I like the way you put it: “better bankrupt at 10 than at 30!” Well said, Edlyn!

  5. coleman says

    sooner or later, today’s children will be in an environment where invisible electronic money is pervasive. should the question then be, how do we teach children to manage money, whether the money is tangible or not?

    i have a friend who would physically lock away her paychecks to prevent herself from overspending. that still works because she gets paid through paper cheques. i wonder what would happen when she eventually gets paid through bank transfers.

    we’ve heard stories of (mostly) young people racking up severe credit card debts. i’m sure some of them did grow up learning how to control their spending using physical means. but they never learnt to manage intangible finances, thus things went out of control once they had access to intangible money.

    so perhaps, it could in fact be a good thing that children are exposed to intangible money early in life. that’s if they are allowed to learn the consequences of mismanaging their money.

    like you rightly pointed out – if they overspend early in the week, they’ll have to go hungry. critically, the parent must have the discipline not to bail out the child even though it might be so easy and tempting to do so.

    like many other new things in this digital age, digital money is not inherently good or bad, and can in fact be detrimental if embraced carelessly. but with careful parenting, it can become a great learning opportunity.

    (full disclosure: i work in a company that’s promoting the use of intangible money, but these are my own views. in fact, i initially agreed with you, but my views shifted after much thought.)

  6. June says

    Hi Coleman, thanks for leaving an insightful comment. I do see where you’re coming from. I’m not saying digital money is inherently bad, and I agree with you that parental guidance, modelling makes a big difference. I also see that our kids will be living in a digital age in time to come.

    But…I don’t see how introducing digital money to lower primary children can be beneficial at all, if we think about what is developmentally appropriate for young children.

    Take early math concepts for example, would you teach a child using a calculator, or would you use real items like jelly beans or apples (or even fingers) to teach them the concepts of addition, subtraction, etc?

    In the past, when we didn’t have EZlink cards, we were so much more aware of how much a bus ride costs, because we need to have the exact change to put into the box.

    Even as we move towards a cashless society, kids will still need to develop their money sense. To be able to pick up what is a good deal, what is not, to be able to mentally estimate which cereal box is more value-for-money.

    I’m not against the concept of the digital watch per se, but I believe it’s more suitable for an older, more mature, target audience.

    Kids in lower primary (aged 7-9) are only starting to learn how to manage money (for most, it’s the first time they’re being given any pocket money in their lives.)

    But if you’re talking about an older child who demonstrates “money maturity” in the sense of being able to control her buying impulses, who upon making a mistake is open to correction, and who has proven herself able to take up more responsibility in this area, only then would I consider giving that child more leeway in terms of either handling larger amounts of cash or being able to handle money digitally. And even then, the onus is on parents to watch closely and correct along the way.

    As the saying goes, “With freedom comes responsibility.”

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