Kids’ pocket money: cash or cashless?

Numbers are abstract, but touching and seeing coins and notes can help kids better understand money. Before paying them their pocket money “digitally,” i.e., by bank transfer, it’s good to make sure they have a basic understanding of cash, money and figures. Help your child count the money in their piggy bank and exchange coins for notes if necessary.

As a parent, try to pay by cash every now and then and show your child which banknotes pay for a full shopping cart or a visit to the zoo. Once your child has a reasonable understanding of money, it can certainly make sense to pay them their pocket money digitally. First, they’ll need a bank account and some way to withdraw money.

When can you pay pocket money by bank transfer?

From the age of 12 it makes sense to give your child more responsibility for managing their own money. One good option is the Jugendlohn. With a Jugendlohn, the monthly amounts generally increase, and it makes sense to open an account that offers a debit card. As a parent, it is then time to set up a standing order for the relevant amount.

Although you have stopped paying them their pocket money in cash, it’s important that you still give your child plenty of support. Help them as they start out, make time for questions and discuss their first bank statement with them.

A possible learning path from cash to digital pocket money

6–9 years: weekly pocket money paid in cash. Familiarize them with the different notes and coins. Set up some initial, small savings goals. Familiarize them with numbers. Teach them how to add and subtract. Practice making pocket money last a whole week.
10–11 years: monthly pocket money paid in cash. Set up some more ambitious savings goals. Get to know some bigger numbers and do more challenging arithmetic. Practice making pocket money last a whole month.
From the age of 12: open an account together and pay pocket money or Jugendlohn digitally. Gain some initial experience with digital payments.
From the age of 13: if necessary, install TWINT or another payment app, if they have successfully managed their pocket money or Jugendlohn.

What should you do if things aren’t going quite to plan?

It’s possible that not everything went to plan the first month. If you feel that your child does not know how much they spend or how much they have on their account, go back one step together. One option would be to continue to pay some of their pocket money or Jugendlohn into their account (e.g., for shoes or clothing) but the rest in cash (e.g., money for books, leisure activities, personal hygiene products). It is then clear when they are allowed to use their debit card and when not to use it. Your child will then have some clear guidance.

Another option would be for your child to leave their debit card at home and withdraw a fixed amount of cash each week or month, which they can then spend on planned purchases during the relevant period. If this works well for a few months, they can start making payments with their card again. Ask your child to come up with suggestions of their own. Perhaps you’ll arrive at a better-suitable solution together.

Key points at a glance:

It makes sense for small children to receive their pocket money in cash. They can then learn how to manage their money in small steps.
From the age of around 12 – for example, when kids start receiving a Jugendlohn – the money can also be paid directly into an account.
If youngsters are able to use their debit card correctly and manage their money well, they can install TWINT or some other app.
If youngsters find it difficult to keep track of their spending, a mix of physical and digital payment can make sense.

UBS’s educational principles

This article was written in collaboration with educator Marianne Heller, who has years of experience in teaching financial education and debt prevention programs for children and young people.

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