Gelduitleg is a complex concept, and teaching children about it should start early. However, it is important to break down the complexities into simpler parts that children can understand and apply. This article provides a good starting point to teach kids the basics of what money is, where it comes from and why it has value.

Money

In the simplest sense, money is anything that people agree to accept for the purchase of goods and services or repayment of debt. This includes coins, banknotes and digital money (like debit card money). In fact, almost all of the things we value in life are exchanged for money. Before the development of money, people exchanged everything from home-grown tomatoes to a haircut through bartering. The creation of money allowed us to buy a loaf of bread or book a holiday without having to trade our home-grown tomatoes for the hairdresser’s time.

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The main functions of money are: a medium of exchange; a unit of account; and a store of value. The first function allows for the quick and easy exchange of goods and services. The second function keeps track of the amount of goods and services that have been purchased. The third function allows us to keep hold of our purchasing power over a long period of time. This is because the purchasing power of an asset decreases over time, unless it has a strong and stable store of value.

In the United States, we use paper money in the form of coins and banknotes that are issued as legal tender by the government. This money is created and controlled by the Federal Reserve, a branch of the Department of the Treasury. Understanding this process will help your child to see that the increase in the quantity of these pieces of paper is not the result of a gift from God, but rather the result of a system that rewards citizens and businesses for their contributions to society.