Three Simple Ways to Explain Money to Kids

Gelduitleg is a complex concept but it’s an important one for kids to understand. Teaching them the value of saving, budgeting and spending wisely gives them key skills for financial wellbeing that they’ll use throughout their lives. This is why it’s important to start the conversation early, and these three simple starting points are a great place to begin.

The first thing to explain is that money is an agreed medium of exchange that symbolises perceived value. It is used to facilitate transactions and power economic growth in economies around the world. This means it is useful for obtaining what we need and want without having to trade directly (for example, trading home-grown tomatoes for a haircut or a book in lieu of paying for the cost of a train ticket).

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It’s also a store of value because it holds purchasing power over time. When you find that $20 bill in your coat pocket from last year, you’re happy because it still has purchasing power and value to you. In the same way, a savings account grows in value over time – and when you deposit money into it, it will become increasingly valuable to you as the amount increases.

Money also has a legal tender function because it is recognised as valid by Governments and accepted by the People as a means of payment for goods and services. This is the reason banks can create money and lend it to you as credit, and why they are regulated by the Government.

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