Key Takeaways

- Start young kids off with real money before introducing them to the digital world of money.

- Make sure kids know that using digital money is not a game and will have real consequences.

- Introduce teens to safe digital spending using financial tools, such as debit cards.

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Medium of exchange

Language is one of the early experiences a child will have with abstract, symbolic concepts. And if a child can work that one out, they can work out that silver coins and green pieces of paper can be exchanged for things they really want. The question is: When do they understand this?

If you ask your children what Mommy or Daddy do with money, and they can answer "buy things with it," then they've grasped the basic concept of using money as a medium of exchange.

Because this young generation has grown up in the digital world, they're incredibly comfortable with the virtual universe. They probably were introduced to this world via video gaming. And many video games, even educational ones, reward players with virtual money that they can use to buy in-game rewards, like pets, clothes, furniture, and more. So subtly, kids are being introduced to the concept of medium of exchange, and the power of earning and spending already.

But playing these video games and "earning" fake money can cause confusion between digital gameplay and the real world of money—which can lead to unwanted problems in adulthood.

Here are 5 tips to help you introduce your kids to digital money:

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