MUCH has been said both for and against the topic, since PM Lee Hsien Loong pushed the point about Singapore becoming a cashless society in his National Day Rally speech.
One of the things that perhaps parents are justifiably worried about is how they can teach their children about the value of money if Singapore goes cashless.
The good news is that going cashless shouldn’t have much impact on how children learn about the value of money. While they won’t have cash to touch, hold or smell, going cashless doesn’t change the kinds of transactions that children will have to engage in as they grow up. They will still have to pay for anything they buy, though the mode of payment will not be the same as in the past.
So, parents can teach them about the value of money using the “old ways”. For example, they can give their children a weekly allowance and remind them that if all their allowance is spent before the week is up, they will not be able to buy anything until they get their next allowance. To guide them towards not spending all their money, children should be encouraged to set aside some of their allowance for charitable donations. This is also a lesson that there are less fortunate people around who may need their help now and then.
Another way to teach children the value of money is to allow them to be party to the bill-paying process at home. It can be a family affair.
Show the children how you pay for utility bills, or a loan installment for your car, or how much you are going to pay for your credit card bills and why it is important to not get too far behind in payments as the interest rates add to the bill every month.
Even if bill-paying is done exclusively online or through a smartphone in a cashless world, parents can use the process as a tool to teach children the value of money.
The next step from this would be to get children to come up with their own budgets for a predetermined period of time. For example, allocate some money to your child for the year and get them to record the outgoings and incomings. If outgoings exceed incomings, they are in trouble, so encourage them to save by offering incentives too.
Parents can say that they will double any money the child has left over at the end of the budget period. This would allow them to buy something that they want but were disciplined enough not to buy because it would have drained their budgets. For a child, a year is a long time, so these budgets could be prepared for every quarter.
Importantly, parents should also teach their children financial literacy and the value of investing money for the long term. In these days of rising longevity, the earlier you start to invest for life stages and retirement the better.
While they likely won’t be able to cover the big-ticket items through their lives like their university education or their weddings, any money they have saved can go towards their retirement. They will learn early that spending today is partly borrowing from their future too.
It doesn’t matter if Singapore is a cash or cashless society, the motivations and outcomes remain the same.
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In the meantime, there is one specific thing that parents in Singapore can do now to remind their children about the value of money.
Before they are completely wiped out of the face of the island and before everything becomes cashless, parents should regularly take their children to a wet market or a pasar malam as a mandatory exercise.
Paying with cash for vegetable, spices, meats, trinkets, souvenirs and so on will teach children not only about how to get good value for their money, but also about the value of engaging with stall holders. The toing and froing of engagement between buyer and seller on price in a market on price may become a lost art in a cashless society. How else can a child learn about the fun and excitement of bargaining?
Finally, parents should set a good example themselves to show the value of money. If they are overspending on their credit cards and always behind on their payments, their children will get the wrong impression that you can freely spend money that they don’t have. Then, if they ask you why your credit card bills are so high when the family can’t afford it, that would be a good indicator that they are on the right path in learning about the value of money.