Getting kids to understand the value of money early is one of the best ways to set them up for financial success later in life. It’s a complex concept, but once kids grasp it, it can help them make wise choices about how to spend their hard-earned cash.

Explaining the gelduitleg.nl fundamental characteristics of money is a great starting point. It’s important for kids to know that money can be used as a medium of exchange, store of value and unit of account.

To serve as a medium of exchange, an asset must be generally accepted in exchange for other assets. Imagine if your local community agreed to accept bubble gum wrappers in exchange for apples, that would be money. It must also be able to hold its purchasing power over time. If a dollar today can buy 10 apples, then it’s serving its stored value function. Finally, it must be easily transportable across space and time. If you could take a pile of 1p coins and put them next to a stack of £10 notes, you’d see the difference in their value.

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Finally, it must be legally enforced and issued by Government for the benefit of the People. The 4th century BC philosopher Aristotle got this right when he said that “money is a legal invention, an abstract social power, which resides in the law and is enforceable by the law.”