Money Explanation For Kids

Money explanation

Kids from pre-school through the tween years can benefit from learning about where money comes from and what it can be used for. It’s important for them to understand that money doesn’t magically appear out of thin air and must be earned, saved and spent wisely. This basic concept will help set the stage for more complicated financial lessons down the road.

There are five  money comes from, and the most important for your kids to learn is that it’s something people earn. They need to know that they’re able to get a certain amount of money each time they earn it and they can use it to pay for their needs or wants, such as food, clothing and shelter. This will encourage them to think about what they spend their money on and prioritize their needs over their wants, ideally helping them make more responsible choices with their spending.

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In addition, kids should understand that money isn’t tangible wealth in itself but represents the power to obtain wealth through exchange. They need to know that it’s a symbol of wealth that is legal tender in the form of coins and bills, which are issued as a medium of exchange by governments for goods and services.

The fourth function of money is that it serves as a store of value. This is a big one for kids to grasp because it teaches them that they should keep their money safe and that the stuff they own has value, which is important for their confidence in their financial decisions. To illustrate this, give them a handful of coins and have them sort by color, size or number. You can even help them count each coin together and then show them how you use the coins to buy things at the grocery store or other stores.