Wise parents would want to teach their children about money, where it comes from, the usage and so on. This article is written with your child as the reader in mind. It is meant to be a guide on money and to be read by both the parent and child together. The parent’s job is to elaborate more on the ideas mentioned in this article. The purpose is to give your child an introduction and a general idea about the function of money.
How did money begin?
A long, long time ago, bartering or the exchange of things or goods was carried out, as money did not exist yet. People traded the things they possess for other things that they do not have. They traded animals like cows, pigs and sheep. Grains and salt were also common as were tea, tobacco, rubber, beads and animal furs.
photo credit: Jarosław Pocztarski
In addition, metal items made of copper, gold, silver, tin and lead were also popular in the form of pots, tools, weapon and jewelry. Eventually, metal was chosen to be the most convenient and the best choice to barter with and coins were produced. However, coins were too heavy in big quantity and paper money was introduced. Today, both coins and paper money are so commonplace all over the world.
Why do people need money?
People use money for a lot of different reasons. Some of which are:
• To buy things that they want
• To buy things that they need
• To help fulfill or meet some of their dreams or goals. For example, to go on a trip or to learn something or to pick up a skill.
• To make it possible for them to assist other people. For example, by donating some of their money to an organization or to the church.
photo credit: Eleventh Earl of Mar
Where do you get the money?
Your parents may give you some money as an allowance or you may have earned that allowance by doing some chores or work around the house. On special occasions like your birthday, you may also receive money instead of a present. If you sell something to another person like toys or books, that person will normally pay you with money.
You will also get or make money if you provide your services. For example, by cutting the grass, by washing the car, by doing babysitting work, by giving tuition to a younger child, by doing housecleaning and by running errands. The money that you get from your allowance and from doing chores or providing services is called an “income”.
photo credit: jermudgeon
What do you do with the money?
You can decide to save the money, spend the money or give it away. Saving money for example, in a piggy bank is for the purpose of saving it for future use. You can ask your parents to open a savings account for you in a bank where it is much safer.
You may also decide to give away or donate some of your money for a good cause. The money can also be spent, as you like. It is important to spend wisely so that you do not use up all of your money. Some money can be used to buy things that are really important (needs) and other things that are fun (wants).
A way of keeping track of your money is to make a list first of what you want to buy (expenses) and the money you have (income). This is called budgeting. Always remember to save part of your money and not to overspend. You will never run out of money if your income is always higher than your expenses. If you keep this up over time, your money will continue to grow more and may be useful to you in the future.
For more great ideas on money, refer to the Carnival of Investing Strategies.
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