As an Educator or parent, you are in a position to help kids learn Financial Literacy from an early age. Knowing how to manage money is a key skill that everyone needs as they grow up. Following are some key concepts about money, including the concept of money itself.
Money
What is money? What does it mean to buy something? The two most essential money skills are simply identifying money and knowing how to make change. But it’s also helpful if kids understand the concept of money and where it came from.
Money has probably been around as a medium of exchange for 3,000 years. Shells, beads, salt and cereal grains have all been used as money. The first coins were made by the Chinese in about 1,000 B.C. and the first official coins were minted in Lydia (now western Turkey) in 600 B.C.
Before that, and also alongside it, is the barter system. This is where things are traded directly. Money developed to speed up the barter process and create a predictable and acceptable system of currency.
Saving and Spending
As young people are learning about the power of money — buying cool stuff they really want — they also need to learn to save. Giving kids real life examples of when to save and when to spend can help them sharpen their decision-making skills. Present them with examples from buying candy to wanting a new bike and have them work out how long it would take to save for each item.
Credit
Credit can be a complex concept, sometimes even for us adults. Kids need to know that if you buy something on credit, you have to pay for it in the form of interest. Using real-life examples, get them to calculate the cost of buying on credit and show that it is more expensive than saving up. Demonstrate the difference between “buy now versus buy later.”
Investing
We generally think of money as tool for buying things, but it’s also a tool for making more money through investing, saving and the magic of compound interest. An important part of investing is doing research to make sure that their investment is strong, by using places similar to Stocktrades as well as other stock market based resources. This is an important concept for kids to grasp. Here are some of the main ways to invest money:
- a savings bank account
- buying a house
- the stock market
- buying other valuable things such as jewelry, art and antiques
Insurance
Financial literacy includes learning about insurance. Insurance is an important tool in any sound financial plan. The most important thing to teach children about insurance is that it exists to protect assets and to keep families safe. If you wanted an idea of what insurance quotes look like, check out Money Expert.
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