The Money Story —Finance for Kids

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Learn the history of money! What is money? Why money is needed?

Use this post to teach kids age 4+ years about history of money from ancient times until today.

Barter

A long, long time ago, people trade item they have with other people who has item they want. This is called as barter. For example: you have apple while your friend has banana. You want banana, and your friend wants apple, so you trade your apple with your friend’s banana.

But barter is difficult.

What if your friend want orange for his banana, and you only have apple? The trade will not happen.

What if your friend want to trade his one banana for two apples? It is not a fair trade.

Money & Currency

People then use item such as shells. This is the origin of money. Yo use item like shells, people must trust each other to agree on the value of the money. For example, if all the people in a village agree that ten large shells are equal to one chicken and fifty large shells are equal to one goat, then trade can happen using shells as money. A man can give ten large shells to other man, which will give one chicken in exchange of those shells. If a man wants a goat, then he can buy the goat using fifty large shells.

Coin : Using Metal as Money

Then, instead of shells, people use precious metal such as gold or silver as money. Using metal as money has several benefits:

  • metal is harder to get compared to shell, which makes metal valuable
  • metal is durable and easy to bring anywhere
  • metal is able to be shaped and can be formed into various sizes
  • metal is shiny and beautiful

Metal money called as coin, and coin was traded based on it’s weight. The heavier the metal, the more value it has. For large trade, a lot of coins needed, and it means a lot of weights.

Paper Money

Paper money was invented in ancient Chinese. Merchant put coins on government, called as treasury. Government gives paper certificate in exchange, which represents how much money the merchant has in treasury. Merchant then use those paper certificate for trade. This way, merchant does not need to bring heavy coins.

Until today, a lot of money we use is paper money. It is light, and easily transfer from one person to another. Paper to make money is durable, not easily torn or break.

Money in A Card

Sometimes, mom or dad pay item using plastic card. They put money in bank. Bank then gives card, which represents money mom or dad has in the bank. The card can be used as money, as long as mom or dad has money in the bank.

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