Gelduitleg your kids are young or growing into teens, it’s never too early to help them understand how money works. Getting them to understand the value of money is key to their financial literacy and ability to make smart decisions. Kids that don’t understand the role of money often think it just magically comes out of their bank account and doesn’t need to be earned or spent wisely.

While most people have handled money and have some idea of what it is, few understand how it works or what gives it its value. This article helps explain the three characteristics that define money: 1) Medium of Exchange; 2) Store of Value; and 3) Unit of Account.

Demystifying Money: Understanding Its Role in Our Lives

The first function is the most obvious one: money is a means of payment for goods and services in a society. Before the invention of money, individuals would trade goods directly with each other. This was inefficient and required both parties to have something the other wanted. The introduction of money replaced this with a tradable good that represented an amount of other goods. Eventually this good was standardized into currencies like coins and paper notes to reduce transaction costs and simplify record keeping.

Kids can easily relate to this concept by comparing it to paying for a meal at a restaurant or an electricity bill. They can also use their own experiences when they’re asked to prioritise what they buy, or how much they’ll need to save for something special.

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