Talking to your kids about the different ways to pay

Talking to your kids about the different ways to pay

Why pay cash when there are so many other ways to pay? It’s no surprise we’re living in an increasingly cashless economy. According to Pew Research Center, 41% of Americans go cashless in a typical week. That’s up almost 30% from 2015. 


But what’s concerning is that research by UCL’s Institute of Education shows that increasing numbers of children are unable to calculate change when paying with cash. Physical dollars and cents may be on the way out, but kids still need to understand how money works. 


Talking to your kids about the different ways to pay is important for their financial literacy. It’ll help them understand the value of money. And the relationship between notes, coins, and a digital wallet. 


Related: Teaching kids about money (Ultimate how-to guide)


What are the different payment options?

As well as traditional payment options, there are lots of different ways to pay digitally. Some of them your kids may already have come across. 


  1. Cash

  2. Check

  3. Bank transfer

  4. Direct debit

  5. Debit card

  6. Prepaid debit card 

  7. Credit card

  8. PayPal 

  9. Digital wallet

  10. Gift card

  11. Contactless payment.

How does each way to pay work?

When you’re explaining the different payment methods, give your kids examples of when they might use them. 


Physical money, such as bills and coins you can use to make purchases. You might use cash to buy a snack or a soda from a vending machine.


A physical document you fill out that instructs your bank to pay someone money from your bank account. To receive your money, that person (or business) deposits your check into their bank account. As long as your bank has the funds in your account, it transfers the money. This process is called ‘clearing’ and can take up to three days. You might use a check if you’re sending money in the mail. 

Bank transfer 

Also called a wire transfer, this is a type of electronic payment you can use to transfer money from one bank account to another. You can use it to send or receive payments or move funds between your accounts. A bank transfer can take anything from minutes to days. It varies from bank to bank. 

Direct debit

This is a way for someone to take money regularly from your bank account. It’s often used for things like bills, subscriptions, or repayments. Let’s say you have a Spotify subscription. Instead of having to remember to pay the fee yourself every month, you can set up a direct debit. This means the money is automatically taken from your account each month and goes directly to Spotify. 

Debit card

A card that’s linked to your checking account. You can use it to withdraw cash at an ATM or make purchases. The amount is typically deducted from your account balance straight away. You might use a debit card to buy a toy or game at a store or order a food delivery. 

Prepaid debit card 

A type of debit card you can load with money and then use to make purchases or withdraw cash at an ATM. Instead of getting your allowance in cash, you might get it transferred to a prepaid kids debit card like GoHenry. This works just like a regular debit card but you can only spend the amount of money that’s been loaded onto the card. 

Credit card

A card that allows you to borrow money up to a certain limit to make purchases. The balance must be paid back by a certain date or you will pay interest. You might use a credit card to book a vacation or a concert ticket. 


An online payment system you can use to send and receive money electronically. You might use PayPal when you’re shopping online or sending money to friends for a group gift. It’s not available to under-18s but there are alternatives for kids.

Digital wallet

A virtual wallet that stores your bank account or credit/debit card details for making purchases. Using a digital wallet means you don’t have to physically present your card or enter your payment details each time you shop. 


Venmo is an example of a digital wallet. You can use it to send, pay and receive money via your mobile phone. It also has a social feed so you can share each transaction you make with friends. You have to be 18 to use Venmo (or the age of majority in your state). If your teens want to use the app, you might find our guide to Venmo helpful.

Gift card

a prepaid card you can use to pay for purchases at a specific store. Instead of cash, you might receive a gift card for a clothing store or video game store on your birthday. 

Contactless payment

A type of electronic payment you make in person by tapping your card or mobile on a device at checkout. You might use contactless payment at a convenience store, a vending machine, or a restaurant. 


Conversation talking points

When you’re talking to your kids about money, try not to preach. Instead, try to involve them in the discussion when the subject naturally comes up. That way it won’t feel forced.


It’s important to keep the conversation age-appropriate and provide clear, concise explanations. Here are some ways to get the conversation started about different ways to pay.  

Cash vs card?

Take your kids to the mall with you, or the grocery store. When you get to the checkout show them which payment method you’re using and explain why. You could use it as an opportunity to talk about using cash compared to cards. Which is easier to carry around? Which makes it easier to track your spending?

Check the check

When you’re out for a family meal, have your child review the check. Does it match what you ordered? Is the math right? What cost the most?

At the ATM

When you next take cash out at the ATM, have your child stand alongside you. Talk about why you should hide your PIN. Make a point of showing them the balance before and after you make a withdrawal so they can see the effect it has on your bank balance. 

Discuss the different payment options 

The next time your child wants to buy something ask them where they’ll purchase it. From a store? Online? And which method will they use to pay for it? It doesn’t matter if it’s candy, a video game or a new bike they want to buy. The point of the exercise is the same. 

Paying their allowance 

If you pay your kids an allowance, ask them how they’d like to be paid. In cash? Or digitally? Talk about the difference between being able to see and physically handle money versus seeing figures on a screen. 


If they want to be paid in cash, ask how they intend to store their money. How will they separate it out to budget? Using jars or envelopes? What happens if they lose it or misplace their piggy bank? 

Cash gifts

Next time your child gets money as a birthday gift, talk about how they want to store this money until they’re ready to spend it. 


You could take them to the bank to pay it into their account. Then show them how to check their balance. It’ll help them understand how physical dollars and cents translate to numbers in their account on a screen, instead of seeing each in isolation.

Fun facts about ways to pay

When you’re talking about money with your kids, remember to make it appropriate for their age. No six-year-old is going to hang on your every word when you start discussing global economics. Try introducing some fun facts to make it interesting. 


You could start by asking questions to make them think. Like, how did we pay for things before money? What’s money made of? Why is a piggy bank called a piggy bank? 


Here are a few fun facts your kids may not know — and maybe you don’t either:

  • Before we had money, people bartered for goods with precious stones, food, weapons and spices. Sometimes even human skulls were used. But it could be challenging to agree on what was a fair exchange. Money was invented to make bartering easier. 

  • The first coins were minted (made) around 2,500 years ago in 619-560 BC in Lydia, an Anatolian Kingdom with ties to Ancient Greece. They were engraved with beautiful pictures of cities. To make them last, the coins were made of metal. Pretty much every coin minted since is based on this original model.

  • China moved to paper money first, in the 7th century. But it took until the 16th century for other countries to switch. However, paper money isn’t made of paper. American money is in fact 75% cotton and 25% linen. In Ben Franklin’s day, people actually repaired torn bills with a needle and thread!

  • The term Piggy Bank has nothing to do with pigs. It comes from the Old English word ‘pygg’, a type of clay used to make jars and dishes that held money. 

  • A penny costs 2.4 cents to manufacture. A cent costs two cents and a nickel, 7.5 cents.

Fun activities to help your kids learn about ways to pay

Children learn best by doing. So here are some fun activities for you to try with your kids to help them learn about ways to pay. 

Pretend play

Play cash registers nowadays come with toy money, credit cards and scanners. Younger children, including pre-schoolers, can run their own pretend store with you as a customer. Ask if they take credit cards and if you can get a receipt. Also, pay in ‘cash’ and get them to count out your change.

Related: Credit card facts to tell your kids and teens

Counting with coins

Try the US Mint website for a range of fun online interactive games like Gold Rush, Counting with Coins, Coin Memory Match and Coin Stamper. Making change is a great one to explain why US currency looks the way it does. They get to design their own coins.

Play board games

Board games like Monopoly, Buy it Right, Money Bags, and Pay Day are great for helping your kids learn money skills. Big Money is also a good one to try. You roll the dice and invest your cash in a range of options, from movie studios to football teams. 

Match the payment option to the purchase

You could even create your own game. Write down the different ways you can pay for things on separate pieces of paper. Then write down a list of things to buy or pay for. (Candy, gas, heating bill, groceries, concert tickets, and  a new TV, for example.) Get your child to match up payment options with the item. 

Show them your debit card

Get out all the cards you keep in your wallet and explain what they’re for. If you have credit cards, explain the difference between those and debit cards. (When you use a debit card the money comes out of your account immediately. When you pay with a credit card you’ll get a bill every month. But you need to pay it all off every month or you’ll be charged interest).

Show them your bank statement

Print out a copy of your bank statement or show them one online. Talk them through it,so they can see money coming in, money going out and what you have left to spend. Point out the different ways you’ve paid for things. 

Play Money Missions

GoHenry’s prepaid debit card for kids comes with Money Missions. An in-app tool designed to accelerate children’s financial literacy, it teaches them useful money skills from budgeting and saving to investing and the stock market. Kids learn at their own pace through fun, interactive games, videos and quizzes. 

How GoHenry can help

GoHenry is a prepaid debit card and app designed for kids and teens aged 6-18. It comes with a companion app for parents you can use to transfer money, set spending limits and get real-time updates whenever your child makes a purchase. So while your child learns financial responsibility, you get peace of mind. 


GoHenry offers your kids several different payment options:

  1. Card payments — with GoHenry your child gets a pre-paid debit card they can use online or in-store. 

  2. Digital wallet — from age 13 your child can add their GoHenry card to their digital wallet to make fast, secure contactless payments without using their PIN.

  3. Direct transfer — The app also makes it easy to transfer money directly to friends and family. 

  4. Bill payments — Your child can pay bills using their GoHenry card. For example, they can use it to pay their phone bill or a subscription to a streaming service. 

  5. ATM withdrawals — if they need to pay cash for a purchase, they can withdraw money from an ATM using their card. 

  6. Direct debits — parents can set up direct debits on the GoHenry app to automatically pay bills or subscriptions on their child’s behalf. 



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Written by Charlotte Peacock Published Jun 2, 2023 ● 5 min. read