What is Money? (A Child Friendly Explanation)

What is Money (A Child Friendly Explanation)

What is Money?

(A Child-Friendly Explanation)

So what is money exactly?

A considerable number of people do not precisely understand what money is.

Therefore, it is not unusual that children will give you all sorts of replies when you ask them what money is.

Despite this, everyone should understand how money operates.

At Wazzio & WazzCards, we believe, that the earlier the children know the intricate details about money, the better.

You (as an adult, mentor, older sibling, parent, guardian or teacher) therefore, need to have a deep conversation with your children about money.

Unfortunately, many parents do not talk to their children about money.

A survey on the degree of communication between children and parents on money has revealed that almost half of parents barely talk about the subject.  This is quite wrong as money talks are central to securing the children financial freedom as early as possible.

Here are some of the critical things that you need to tell your children about money.

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Related: Debit vs. Credit Purchases

Medium of exchange

Money as a medium of exchange

For many children, money is a commodity they can collect, save, and purchase their favourite items. While many do not understand the sophisticated currency system, they still have a basic idea of money.

It would help if you made it easier for them to understand money by explaining it to them in simple terms.

Just make sure that you use terms and logic which is comprehensible at their level of conception.

Make them understand that money is a tool of exchange.

Also, teach them that money is scarce and therefore careful spending is essential. This will instil a sense of awareness that once they spend money, it cannot be recouped. Let the children know that money should only be exchanged when it is necessary. Many parents have this conversation when their children are about 10 years old and above.

However, the earlier you start, the better.

How is money created?

Among the fundamental basics that you should impart to your children is how money is created. You don’t have to use elaborate explanations to have them understand this.

For example, you can explain that the Federal authorities create money and then distribute it via banks.

Tell them that money is not just printed and released for use. If this happened, there would be a problem with the economy. Therefore, the authorities have to regulate the creation process by setting rules to ensure that money does not lose its value.

You also need to explain to children that money is a medium of exchange. Therefore, money is used as a standard exchange tool rather than using conventional concepts such as barter exchange. You can use simple analogies to teach them how this exchange occurs. For instance, tell the child that they have to part with money when they want to purchase ice cream at the store. This will enable them to understand that money is valuable, and without it, they cannot get their favourite delicacies and toys.

With WazzCards: Learning The Right Math

At WazzCards, we use our quizzes and decks to reinforce the concepts of financial transactions and the concepts of money starting at grade school. So, if your little one is in grade 3 and above, our decks and quizzes can help with everything from financial planning, to learning discounts.

We even get into credit card transactions from grades 4 and above.

Lots to learn about money and fun at an early age with WazzCards financial literacy decks prepared for teachers and parents by teachers to help the little ones in our lives learn these crucial concepts at an earlier age.

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Image Source: WazzCards App

Closing Thoughts

Initiating a conversation on money with your children is the key to setting them on a journey of financial freedom. Therefore, let them learn the value of the dollar as early as possible.

Teach them the value of saving to achieve some of their needs. Also, incentivize them to save by offering to reward them when they save a particular sum. As you impart these skills to them, you need to lead from the front. Let the children see you save and forego some unnecessary spending. Otherwise, you may never have them save if you are a spendthrift.

Children like mirroring, and when you show them the way, they will undoubtedly follow.

Guide them on the path to financial freedom.

Thoughts on our article today? Want to get in touch and learn more about the WazzCards app? Get in touch by reaching out at [email protected]