Financial Saavy through real money scenarios
When given a Fisher Price Talkie Telephone for our 9 month old, we were delighted; both parents had one when they were young and thought she would have hours of fun. She loves playing with it, hearing the tinny ringing sounds as she pokes her fingers in the holes and bangs the headset against the floor – but we quickly realised that she doesn’t think that it’s a phone. To her phones are square things with lights that mum and dad touch with their fingers. There is a black thing with buttons around that rings sometimes, but very rarely.
The Talkie Telephone got me thinking when financial educator Dean Blair pointed out that our kids are learning maths with outdated real world money scenarios. As the use of cash is on the decline and cashless, contactless payments are on the rise, why are our kids still using toy coins and notes to practice math?
“Real world scenarios are a great way to practice how to work with numbers, and it can be the first time our kids interact with the idea of spending, but the problem is when they grow up its eftpos and credit, not coins and bills,” says Blair.
Blair says the outdated real world scenarios for math exercises is a missed opportunity from a very early age to ingrain the same “sensation of loss” you get when spending cash that you get when spending with an eftpos or credit card.
“There’s a lot of research that shows we spend more money when using plastic than we ever would with actual cash because we don’t have the sensation of loss of money, and I’ve learnt that this dissociation is starting at the primary school age, but I can’t help but wonder if it’s because kids aren’t practising money based math problems related to the use of eftpos and credit cards.”
Blair runs financial literacy boot camps in schools to teach kids about saving and spending, and said the response when asking the kids if a $20 note or an eftpos card buys you more in the store is worrying.
“I asked the kids if they bought 10 things for $2 each could they afford it with the cash, and separately could they afford it with the card? When asked if they could go further and buy another item, they knew they couldn’t afford it with the cash, but most assumed they could with the card. There’s an attitude that plastic is a bottomless pit of money from a very early age,” says Blair.
Earlier this month the media was reporting on how couples earning more than $100K were struggling to make ends meet, and Blair thinks a lot of the issues associated with this problem can be traced back to the fact we practised using cash, but not cards and haven’t developed the associated loss when using cards.
“It wouldn’t be difficult to create math resources where scenarios included pretend credit cards and eftpos, where calculating and accumulating interest to understand debt was a factor in the exercise.
Dean Blair is an Authorised Financial Advisor from FoxPlan Limited.