What is money? Children quickly learn mom and dad use money to buy stuff, but they usually lack the understanding of where that money comes from.
- It can be helpful to give them an example of bartering. Explain that long ago, a person might have traded a horse for a cow. But having money allows someone to buy a cow, even if that person doesn’t want a horse in exchange.
- Discuss with your children about how people have jobs and work so they can earn money to pay for a house, car, clothing, entertainment, and other expenses.
- Make the point that money is a medium of exchange. You have likely exchanged a certain number of hours of your time to earn $100. You then spend that $100 on goods or services worth $100.
- Show them all the different types of money, including coins, and explain the values.
Let them earn money. This is the best way to show them how money works. Let’s dispel the misconception that money magically appears from the ATM. Give your children small jobs to do in exchange for money. Explain to them how your family earns money.