How to Teach Your Kids About 'Money'

How to Teach Your Kids About 'Money'

Teaching Financial literacy to kids can be challenging. Here's how to go about it!
How to Teach Your Kids About 'Money'

Beautiful Money By Leena Parwani 

Like most other ‘grown up’ things, your children will learn about money when their peers speak about it. You may however see no harm in it and wonder how a discussion about money can be harmful to your child. It is in fact, important for you to be aware of this, because just like everything else, your child can develop certain misconceptions about money if he or she is not properly informed. So take some time out to teach your child the importance of finance, which will be a fun exercise for both of you.

What is money: The concept of bartering

Start off with informing your child about the old practice of bartering goods. Explain how previously, people exchanged one thing, in return for another. Explain how an object of value needs to be given up only if there is another object of a high value available in return and vice-versa. By doing this, you can introduce your kids to the basics of finance and how a certain value is attached to everything.

Introducing money

Once your child understands the concept of bartering goods, move on to teaching them the actual concept of money. Explain them that since it was difficult to carry large items from one place to another, man created money, which was more portable. Take your kids along with you when you go to a market and show them how you use money to buy goods and services. Explain to them that money works on a similar principal as bartering.

Explaining denominations

The next step that you have to take up is teaching your kids about different types of money. Show them the various coins and currency that we have in our economy in common denominations. Give them some money and ask them to segregate it in the correct groups. This will be an educative activity for them.

The basics of banking

The final process in teaching your kids about the basics of finance is introducing them to the banking system. Don’t get into too much detail, but, just tell them very casually about the concept of deposits and withdrawals. Tell them that a bank is a place where their money is kept safely, and take them there to understand the environment better.