Cash Is the First Teacher of Money: What the White Paper Reveals About Financial Literacy Today

The new Koenig & Bauer Banknote Solutions White Paper opens with a stark reminder: money is woven into every major decision we make, yet the skills needed to navigate it remain unevenly distributed.

Financial literacy influences everything from debt and employment to mental health and social cohesion. Despite years of digital expansion, global financial literacy levels are low — and digital financial literacy is even lower.

Only 29% of adults meet the minimum competency threshold needed to use digital tools safely. In this landscape, the push toward cashless systems risks amplifying existing inequalities rather than reducing them.

What the report makes impossible to ignore is that cash is not simply a payment mechanism; it is a learning system. For most children, cash is the first encounter with value.

A coin passed across a counter, a wallet that becomes lighter, a moneybox that fills slowly over weeks — these experiences shape how young people understand limits, consequences, and the real cost of choice. Parents across Europe instinctively recognise this.

In Switzerland, over 80% of children receive pocket money in cash. In Germany, 94% of adults believe cash plays a unique role in building children’s financial competence. Even in digital-heavy environments, physical money remains the primary educational tool.

Cash is the first teacher of money

The white paper also pushes beyond childhood. It documents how cash supports financial resilience in adulthood: it sharpens price awareness, creates natural spending boundaries, and helps people avoid the “invisible leakage” that digital payments often encourage.

For younger adults facing rising living costs, cash is a tool for control rather than nostalgia. Envelope budgeting has made a comeback among Gen Z and millennials precisely because it restores a sense of clarity digital interfaces blur. Cash also functions as a form of protection.

For people living with domestic financial abuse, private access to physical money can be the difference between remaining trapped and being able to leave. For workers in informal economies — where two-thirds of the world is employed — cash remains the only accessible and trusted medium.

The report’s geopolitical message is equally sharp. Financial inclusion rates have risen globally, but inclusion without literacy creates systemic risk. When highly cash-dependent populations are moved rapidly into digital systems they cannot navigate, they become vulnerable to scams, fraud, and uncertainty.

The OECD’s findings underline this danger: populations with lower education and income are least equipped to manage digital transitions. The outcome is predictable — misuse, confusion, or withdrawal from essential financial services.

Across its chapters, the white paper argues that the path to a balanced financial ecosystem lies not in replacing cash but in recognising its educational and social value. Cash remains the most accessible, intuitive, and equitable tool for teaching people how money works. Digital systems offer convenience and scale, but they cannot replace the sensory, emotional, and behavioural learning that cash enables. The research lands on an unambiguous conclusion: the future of financial competence depends on protecting and strengthening the role of physical money, not sidelining it.

The full report and White Paper is available here.