Bridging the digital divide
Four essential strategies to equip children for financial literacy in the digital age
Authored by the Merrill Center for Family Wealth®
The way we interact with money has changed drastically in recent years. Cash is increasingly rare, and digital transactions have become the norm, shaping how we think about earning, spending, and saving. While these changes offer convenience and new opportunities, they also present challenges, particularly for young people and their need for relevant financial education. Without hands-on experience handling cash, children and adolescents may struggle to grasp the real-world consequences of digital transactions.
At the Merrill Center for Family Wealth®, we recognize the importance of equipping the rising generation with the skills to navigate the financial landscape confidently. To bridge the digital divide, we’ve identified four essential strategies families can use to foster financial literacy and responsible money management in the digital age.
Understanding the digital shift in financial literacy
Traditional financial education often focused on tangible experiences — balancing a checkbook, handling cash, and making in-person transactions. However, today’s financial landscape is almost entirely digital and children and adolescents are often exposed to these tools before they are able to fully understand them. This shift underscores the need for updated financial education strategies that reflect the digital world in which the rising generations exist.
1. Identify transactions across digital payment forms.
Understanding where money comes from and where it goes is foundational to financial literacy. Today’s children encounter financial transactions in various forms — mobile wallets, tap-to-pay, auto-renewing subscriptions and in-app purchases — yet may not recognize these as real expenditures. Making digital transactions tangible is essential in helping children grasp their financial implications.
Steps you can take:
- Explain the transaction “trail” by walking children through purchases and bank statements.
- Highlight the difference between real money and virtual currency in games and apps.
- Remove cash from a wallet or piggy bank when digital transactions are made to make the transaction tangible. Alternatively, encourage children to manually track their purchases in a notebook or digital spreadsheet to visualize their spending habits.
2. Encourage interfacing ─ and learning ─ with digital financial tools.
Just as practicing with physical money teaches financial responsibility, hands-on interaction with digital financial tools can help children develop confidence in managing their finances. Digital tools can teach budgeting, saving and responsible spending in a way that is intuitive and engaging for younger generations.
Steps you can take:
- Open a SafeBalance Banking® account for your child and involve them in tracking their balance.
- Introduce budgeting apps that help them visualize earning, spending and saving.
- Teach them how to use online banking safely, emphasizing password security and fraud awareness.
3. Have family conversations about responsible digital financial behavior.
Financial habits and beliefs are often shaped early, influenced by family communication, actions and values about money. Many parents assume that financial discussions should only happen when their child starts earning money, but starting these conversations early helps children build a healthy relationship with money while shaping attitudes, values and behaviors. Creating an open dialogue about financial decisions fosters awareness and responsible behavior.
Steps you can take:
- Talk about money as a neutral tool—avoid categorizing it as a positive or a negative.
- Use everyday experiences, like grocery shopping or online purchases, as teachable moments.
- Create financial goals together as a family, such as saving for a trip or a special purchase. Compare options online as you plan together
4. Learn how digital transactions affect the brain.
Online shopping, in-app purchases and gamified spending experiences are designed to trigger instant gratification, making it easy to overspend. Understanding the psychological effects of digital transactions can help children and teens develop impulse control and make thoughtful financial choices.
Steps you can take:
- Explain how marketing and in-app purchases are designed to encourage spending and target the buyer.
- Set ground rules for online purchases and social media usage.
- Encourage mindful spending by requiring a waiting period before making non-essential purchases.
Looking ahead
As the financial landscape continues to evolve, so too should the way we educate children and adolescents about money. By equipping them with knowledge, real-world experience, and financial decision-making skills, we can prepare them for a future where digital finance is second nature.
Read the full paper to learn about these strategies in greater detail, explore age-appropriate activities and review conversation starters. Connect with your Merrill private wealth advisor to discuss further and to access other resources tailored to the rising generation.
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