Last week, one of our friends at the pub introduced us to the idea of teaching kids frugality using Target gift cards. He told us that he has shifted from giving his kids their allowances in hard cash, to giving them their allowances through gift cards – specifically the Target gift cards in question here. Listening to him, I started to see why the idea of teaching kids frugality using Target gift cards makes sense.
When you give your kids their allowances through Target gift cards, you end up introducing them to the idea of ‘delaying gratification’. That is because the nature of gift cards is such that one is forced to ‘think/pause’ before spending the money in them. They are unlike hard cash, which most of us are inclined to spend thoughtlessly, impulsively. Thus, by giving your kids their allowances in the form of gift cards (as opposed to hard cash), you essentially end up teaching them to be ‘thinking’ before spending their money. And that is a very important skills to have, in as far as financial literacy goes.
There is also the fact that the specific expenditures made through gift cards can be easily traced – through the gift cards’ transaction histories. For instance, when it comes to the Target gift cards, you only have to visit the mybalancenow portal to get a full list of the transactions that were made using the card. Thus, when you give your kids their allowances in the form of gift cards, they spend the money knowing that you have a way of tracing what they spent the money on. This teaches the kids the idea of financial accountability, which is yet another important financial literacy skill. For instance, while checking through the gift card’s transaction history you discover that they spent some of their money on ‘useless’ things. Then you can have an opportunity to sit down with them for a lesson on why money is an important resource, which needs to spent with care – in other words, a lesson on frugality. The same would be very hard to hack with cash allowances: as you have no way of knowing what the kids spent the money on, once it gets in their pockets.