Posted by: Daryl & Wendy Ashby | April 1, 2011

Money Talks

While my girls now have families of their own, they now are faced with the reality of explaining the value of money to their children. To make this process a wee bit easier, we plan on providing you with a few useful ideas:

How to explain the concept of money to youngsters.
Understanding what money is can be surprisingly difficult for young children to grasp. They may not understand its value, how it’s earned, or its limitations. The good news is, most kids get the hang of it pretty quickly! So don’t be afraid to start slowly, making sure they have a good grasp of the basics.

1. Start by talking about what the word “money” means
Explain that, long ago, coins and paper money didn’t exist as we know it today. People used beads, animals, salt, grain, silver, gold, and even beans to buy or trade for food, clothing, or other things they wanted. In some parts of the world, those systems still exist.

TIP: Use the story of Jack and the Beanstalk to illustrate how the barter system works. Jack gave his family’s valuable cow to the peddler because he thought the magic beans were a fair trade. Were they?

2. Look through your own stash of coins
Just about everyone has a bank, or a bottle, or a coffee can filled with coins. Now’s the time to break out your collection and play “show and tell” with the kids. Be sure to show off any 50-cent pieces or silver dollars you have squirreled away and point out any special commemorative coins (the Terry Fox loonie, poppy quarters, centennial pennies) in the collection. Talk about how these special coins are different from (and similar to) their more ordinary counterparts.

TIP: Point out the different images on the “heads” and “tails” of the coins and take a look at the dates on each one. How many different ones can your kids find?

3. Play show and tell with an assortment of bills
Go through the bills in the same manner as the coins, looking at their different images and dates. And if you still have any old $1 or $2 bills, bring them out.

TIP: It’s probably best to stick with the $5 and $10 bills for now, partly because smaller denominations are more meaningful to young kids and partly because kids this age are starting to count by fives and tens.

4. Talk about the value of the coins and bills
Use pennies or groupings of smaller coins to illustrate the value of our money. For example, point out that five pennies are the same as a nickel; four quarters are the same as a loonie; five loonies are the same as a $5 bill; and so on. Point out that the size of the coin isn’t necessarily a reflection of its value. Kids typically assume that bigger coins are worth more, but as the dime proves, that’s not always the case.

TIP: Gather some small objects from around the house that cost less than a dollar or two (an eraser, gum, birthday candle, chopsticks, dollar-store toys, etc.). Have your kids use their new-found moneysense to show you how much they think the objects cost and how much they think they’re actually worth. Try the Money Memory Game with your kids.

Fun facts about pennies

  • A four-litre jar (the size of a milk jug or a big pickle jar) can hold 4,992 pennies – that’s $49.92. 1
  • The world record for collecting pennies goes to a group of kids in the U.S. who collected almost 16 million pennies! They attached all of the coins to a long, long piece of tape and made a chain 120 kilometres long. To help your kids grasp how long this really is, explain that 120 kilometres is about the same distance as going to Grandma’s and back; or back and forth to school 10 times.
  • If you wanted to make a chain of pennies to go all the way around the earth at the equator, you’d need about two billion pennies! It takes the Mint about 2.5 years to make that many pennies, so you better start saving! 1
  • You can call it a penny or a cent or a sou (if you speak French), but the penny’s official name is the “one-cent piece.”
  • The penny turned 100 in 2008!
  • The penny is the most collected coin in Canada – because just about everybody has a bank or a jar or a drawer full of them! 1
  • 1http://www.mint.ca

Article by Kris Wallace.

Kris Wallace is a mom and an award-winning writer with more than 15 years’ experience writing about personal and family finances from her home in B.C.’s Okanagan Valley.

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