Money Explainer – Why It’s Important to Teach Your Kids About Money

Geld Uitleg is a pretty complex concept, but it’s one of the most important things we can teach our kids. Kids who don’t understand the value of money are more likely to make financial missteps that can have lifelong impacts. That’s why it’s crucial to start talking to your children about money at a young age, even if it’s just in baby steps.

In this Explainer we break down what money actually is and how it works. We discuss the three basic functions of money – as a medium of exchange, a unit of account, and a store of value. We also explain the difference between fiat money (paper notes and coins) and commodity backed currency, giving examples of both.

From Barter to Banknotes: Tracing the Evolution of Money

Before the invention of money, people had to trade the goods and services they owned directly for those they wanted. This problem was called the double coincidence of wants and it could only work if both participants had something that the other wanted. Money solves this problem by acting as an intermediary good that reduces transaction costs and allows for the exchange of goods that would otherwise be impossible.

This is why a piece of paper printed with a dollar, euro, or yuan has much more value than an identically sized scrap of paper torn from a newspaper. It’s not just the paper, but the knowledge that everyone agrees it represents a particular amount of value. The same is true for gold and other commodities that are used as money.