Financial literacy for kids: Teaching the ABCs of online money

Piggy banks, and pocket money paid in notes and coins, are staple tools for teaching youngsters about the value of money. The rise of electronic transactions and digital currencies, however, presents new challenges – and opportunities.

Many children are growing up in homes where financial transactions are made electronically, and cash is used only rarely. This shift poses a dilemma for parents and educators: How do you make money tangible and understandable if you hardly ever deal with it in a physical form?

Teaching through example

Even in our digital age, the most important money lessons are still imparted through the actions of parents and family members, says Sarah Nicholson, operations manager of JustMoney.co.za, a platform that helps South Africans make good money choices.

Children learn by observing their caregivers, so following sound money management practices in your home is a great starting point.

Involve kids, at an appropriate level, in talks about household budgeting, saving for big expenses such as holidays, and taking out a loan for a home renovation, Nicholson suggests.

“An important lesson is teaching the difference between ‘needs’ – essential items such as food and clothes – and ‘wants’, such as toys and treats,” she says. 

Building on these foundational blocks, the digital world offers many fun opportunities for teaching children about money through interactive games, apps, and online platforms. These allow children to gain hands-on experience, develop critical thinking skills, and build a strong base for financial responsibility.

Money-management games

Here are some ways to use digital tools to create teaching opportunities:

1. Take advantage of online money courses and workshops geared at different age groups. Many use puppets, music, and story characters to make learning about finances fun.
2. Introduce children to online banking by showing them how payments, money transfers, and other transactions are done via a financial institution’s website or mobile app.

• Read a JustMoney article on how to choose the best bank account for your child.

3. Help your child keep track of purchases by using simple budgeting apps or spreadsheets. This will help them understand where their money goes and how much is left after spending.
4. Encourage saving by using banking apps featuring virtual piggy banks, thermometers, or progress bars, so that children see how their money grows.
5. Explain fees associated with online transactions, such as service and interest charges. 
6. Show your child how to monitor online accounts so that they can detect unauthorised deductions or charges early.
7. Help kids understand value for money by involving them when you search online for the best quality at the lowest price.
8. Make them aware of security and the need to protect themselves against online fraud by discussing the importance of using strong passwords, not sharing financial information, and recognising phishing attempts.
9. Create your own virtual-economy simulation if you have experience in programming and 3D modelling. Children can earn “virtual currency” by completing tasks, chores, or educational challenges and use this to “buy” digital goods.
10. Instil ethical online shopping values by encouraging responsible buying, such as supporting brands with strong sustainability credentials. 
11. Encourage entrepreneurial skills by showing your kids how to use digital tools to bring their ideas to life and generate income. Tools range from graphic design apps to create stunning visuals, to platforms that allow multiple users to collaborate on projects in real time.
12. Set up a secure online marketplace where your children can sell handmade crafts, artwork, or digital creations.
13. Help them understand investing with simulated share-trading games tailored to children. They can also follow the share price of a well-known brand such as Disney or Nike.
14. Teach children how to fundraise by supporting a cause they’re passionate about, such as rhino conservation. They can contribute to, or start, an online campaign on a crowdfunding platform.
15. Go on a crypto treasure hunt by taking part in an online game to unlock a digital wallet – or hide your own clues around the house or neighbourhood, leading them to digital wallets containing small amounts of cryptocurrency.
16. Introduce children to the concept of currency exchange by creating a digital platform where they trade different types of virtual currencies or tokens. This helps them understand the factors that influence exchange rates.

Incorporating these tools and interests into your child’s life will help them develop the skills and knowledge they need to navigate the modern financial landscape responsibly, says Nicholson.

“Encourage questions and create an open environment where children feel comfortable discussing money. Provide clear explanations tailored to their age and understanding,” she concludes. 

• Watch a JustMoney video to find out what kids think about money.