How to raise debt-free kids in a world where money isn`t real

38% of the people between ages 18- and 24 years in Switzerland are indebted. Why is that?  – Because money has become something intangible and unreal in the world of today`s youth. 

Research clearly shows the increasing numbers. More young people are indebted than ever before. Every tenth person in Switzerland between the age of 18 and 24 years old has more than 2000 Swiss francs debt (Handelszeitung, 2015). The internet generation is the demography with the highest risk of falling in debt since youngsters have only little or no control over cash money. (A. Carroll, 2015) Reasons for this are the various payment methods that one has nowadays. Today`s youth grew up with PayPal, Apple pay, credit cards, debit cards. Since many of these payment systems are deducted up to a month later from one’s bank account, the likelihood of losing track is enormous. Furthermore, having everything available at any time doesn’t make things easier. How often does it happen to you; you`re at home chilling and browsing through online shops, not thinking of anything bad and swoosh, you checked out via credit card and bought a chart full of goods? Then, at the end of the next month, you are shocked by how high your credit card bill is, right?

According to Adam Carroll, a speaker, author and financial consultant at Renzo Experience, this is a social problem that already starts at a very young age of today`s children. Kids do not recognize that all those payment systems actually need cash money to be covered. Only a couple of months ago I paid my groceries at the cashier via Twint. Behind me was a mother with her seven-year-old kid. When the little boy saw me paying with my phone, he said to his mom that he wished he had a phone as well, so he could buy himself toys with the device. This was shocking! It made me realize that especially young children, who grow up with all those alternative payment systems instead of hard cash do not know what money is, where it comes from and therefore will lose control by the time they can access and use those systems. For them, money isn’t real! How should they know better? Or how can we raise kids who know the concept and value of money? Money to young children is somehow abstract and when we as adults further the abstraction even more by waving a credit or debit card over a sensor. “This is actually the recipe for a financial disaster for them later in life. They see money as limitless because they have no concept of the back end until it comes around and bites them – in the back end.” (Carroll, 2015)


So, how can I prevent my children from falling into debt?

The most simple answer to the questions above is that we need to explain and show them how money works. This means that whenever we buy something in their presence, we must explain to them how and with what we can buy goods – money! Of importance is also that kids get confronted with hard money from a very young age. The easiest way to do so is by giving them regular pocket money as soon as they go to school. According to Luzernerzeitung, children should get the same amount of money as in which school year they are. This means during the first grade one franc per week, in the second grade two francs per week and so on. By the age of twelve, when kids start going to secondary school, it is recommended to give them rather a “youth salary” than pocket money. What the difference is? Pocket money is meant to be cash for which kids can buy things they don’t really need like sweets, small toys or public transportation tickets for their first excursions to a village or city nearby together with their friends. With a method like this, they realize that almost nothing is for free and that they must save money if they want to buy themselves something bigger and more expensive. The so-called youth salary is meant to be the first regular income with which teenagers can pay their first bills such as for their mobile phone contract and clothes which they maybe not necessarily want or need. It is also meant to be used for cinema visits and, for instance, have lunch with their fellows (Osman, 2018).  The “salary” should be between 100 to 300 francs. Dealing with a fixed amount of money will teach them that an, at the beginning a seemingly large amount of money is not that big anymore after covering all their fixed costs. Thereby, the young have  possibility to learn about money and appreciate the value it has. If children are not raised with the task of having control over their expenditures in form of hard cash from a young age on, it is very likely that they also won`t have control over their money when they`re grown up.

Statistics already show that people spend on average 12-18% more when they pay by credit cards or similar systems than if they would when using hard cash. One can only imagine how this number will increase if today’s teenagers were never thought of what hard money nor what the value of money is since it can be spent with intangible methods. Or when looking at it from the opposite, when paying with cash, people spend on average 12-18% less (Dun & Bradstreet, n.d.). Why is that? According to Frankfurter Allgemeine, it is because humans don’t feel personally connected when paying by cards or apps (Klemm, 2017). Taking money out of your own wallet and handing it to a cashier hurts. And this is exactly what makes hard money buyers more conscious about their expenses.


I have no kids yet but am still struggling with having control over my financial conditions

Now for all those who have no children yet but are already grown up and have maybe also struggles with having control over their expenditures as I had when I was younger, here is a simple trick for you. Have you ever heard of the 50/30/20 rule? No – well then, I`m going to explain to you how it works.

Half of your monthly salary should be planned to be spent on fix costs, such as rent, phone contract, insurances, food, car expenses, etc. Here it might help to write down all the monthly fix costs and sum them up to see how big the amount in total is. If it is higher than 50%, you might want to consider making some changes because, in the long-run, high fix costs will cost your neck.

Another 30% of your net salary should be planned, to be spent on pleasurable things, such as going out, traveling, shopping and so on. With that 30 %, you can do whatever you want.

The last 20% and this is very important, must be fixed to be transferred to a personal savings account, no matter what. Imagine putting 20% of your salary aside for five years. Assuming you have a net-salary of 5.5k a month saving 20% for a five years period, you end up with more than 70k on your savings account. What`s really important, is that you put these 20% away as soon as you get the paycheck. Back in the days, I always went to the bank on the day my salary was paid and transferred roughly 20% of the money to another account so I couldn`t spend it anymore.

Of course, there are lots of other methods about how to manage money but in the end, the only thing that counts is that you can live a happy life without money troubles. Therefore, I recommend to not close your eyes from reality when it comes to financial coordination in life! Only buy stuff when you can afford it and avoid payments by installments. It can end up like a rat`s tail and put you into financial ruin as soon as you lose control over it. There will be times where you have “too much” money because you didn`t go out or simply didn`t spend everything, but remember, in these months you can prepare yourself for times you might won`t have enough.



Graetzer, M. 2013. “Generation Minus” Jugendliche in der Schuldenfalle

Osman, I. 2018 in an article of Luzernerzeitung. Schulden wurzeln oft schon in der Kindheit

Carroll, A. 2015. When money isn`t real:                               

Handelszeitung, 2015. 38% der jungen Schweizer sind verschuldet

Klemm, T. 2017 in an article of Frankfurter Allgemeine. Wer mit Karte zahlt, kauft mehr

Finanzcheck, n.d. Die 50-30-20 Regel                                                 

Dun & Bradstreet, n.d. Credit cards vs. cash                                            


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  15. Good work, Dustin!
    In my opinion, you have chosen a relevant topic that is very much underestimated. Furthermore, it is an issue everybody can relate to in everyday life.

    You have used an appropriate style of writing for a blog post and I like your use of open questions to make the reader reflect. Your text is factually supported through the use of reasonable sources. I think, starting with a strong statistic to show the importance of the issue is a good choice.

    After introducing the problem, you provide the reader with suggestions to prevent this issue when raising kids by conveying the value and meaning of money. Additionally, you end with useful recommendations for grownups (e.g. avoid payment by installment) and a reader-friendly example calculation showing the impact of saving.

    The lack of awareness for money is an increasing problem since new non-cash services are constantly being introduced. I think it is also the responsibility of the service providers to protect against the loss of consciousness of money. For example, cashless neo banks try to remedy it by providing personal expenditure statistics (like Revolut). 

    Suggestions for improvement:
    – Give the reader an overview of the main take away in the beginning
    – Shorter titles could be more catchy

    Thank you for sharing your valuable thoughts on the issues of a cashless society.
    Keep up the good work, Dustin!

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