If gelduitleg.nl were to ask kids what money is, they might say something like: “money is something that I collect and save to buy things.” They may be right, but they also probably don’t have a very deep understanding of the complexity of our currency system. That’s why it’s important to help children learn about the multifaceted characteristics of money—and how they work together to make our economy run.
Explain that the most important characteristic of money is as a medium of exchange. This is what allows people to trade goods and services, and pay for their debts. Without it, economies would be based on bartering—which is a complicated process and raises the possibility that the two participants in a transaction will have a conflict of wants. In addition, it can be hard to determine a fair price when you’re comparing different goods and services that aren’t directly comparable. Money solves this problem by acting as a common standard of value.
The Role of Money in Economics: An In-Depth Analysis”
One of the other characteristics of money is that it can be stored for a long period of time. This is why it’s important to teach kids that you can take your saved money and put it to work in ways that will allow it to grow for the future, so that you can use it when you need it. Putting your savings in a bank is one way to do this; investing in stocks or other companies is another.
