Within the education that we give to our children, the teaching of economics is one of the pending subjects in most cases. Teaching how economic relations work, the concept of income and expenditure, the value of things or the concept of money and its use, is not easy to transmit or even to learn.
To face the teaching of how the economy works in our children, we must follow some basic criteria and a series of rules so that they know how society works and the economic relations between individuals. Here are the first three rules to teach the economy to our children and to value what they have.
The exchange of goods and services, the first lesson
Determining the right age to begin economic education is complicated since each child shows a different capacity for reasoning and learning throughout his or her life. In any case, the first concept we should teach a child is how barter and the rudiments of trade work.
This teaching is practically an innate teaching since on many occasions, our own children are taught the concept of barter through teachings of good-evil or right-error. Using the phrase “if you behave yourself, let’s go to the movies” or “I’ll buy you this gift if you pick up your toys” is one of the first approaches to barter.
On this basis, we can explain to a child with relative ease how trade and the exchange of goods or services work and simultaneously we can introduce the concept of money as a key element for the standard valuation of any exchange.
What is money, explained for children
Explaining what money is to a child is a bit complicated if we want to understand money in the same way that we adults do. One of the best definitions of money for a child is the following:
Money and its different representations (bills, coins…) are the symbol of the value we give to things so that we can exchange them for other things. If we use money, it is easier to put people in agreement so that we can exchange what we need and that helps us to live better.
At this point, parents, we will be able to explain to our children how parents get money through their work and with that money, they can buy things for their daily life. In the same vein, we can explain that if we do not have money for our work, it is very difficult to make an exchange with other people.
A simple example for our children to understand this mechanism. Suppose parents work in a car dealership and instead of paying you with money in exchange for your work, they will pay you in vehicles or car parts. If we then want to buy food in the supermarket, they will not exchange our food for those car parts, because in the supermarket, they do not need them. On the other hand, if in the work of selling cars, they pay us money, if we can exchange it in the supermarket for food.
The value of things, what two parties are willing to accept
Finally, the next phase of basic economic education for our children is to explain how to quantify the value of things and how the value of things is always relative. This value is very simple to explain whenever we delineate that this value is what two parties are willing to accept for the same.
It is enough to give them a couple of examples contextualized to their age. Suppose we are in the jungle and we don’t have shoes. How much would we pay for a light bulb in the jungle? Its value would be zero, given that in the jungle itself we do not have electricity and therefore we would be buying a useless object.
However, if someone offers us some boots if we could pay for them the amount that we consider reasonable and that improves our walking through the vegetation.
How to make our children value what they have
Valuing a product, service or else implies being aware of the effort we need to achieve it. Value is a relative concept that depends as much on the need we have for that thing as on the effort we have to make to achieve it.
All parents explain the value of things with the mechanisms of effort or reward to their children with the examples we have already set. Translating these values within the monetary field can be done by comparison as a first approximation.
For example, we can explain to them how much we have to work to pay for our housing or how they themselves get good rewards or gifts if they achieve high goals. Translating a gift, a trip or a holiday into monetary terms can directly teach them how subjective values are translated into economic terms and they will learn to formally and emotionally value what they have.
In short, the first thing our children have to learn are the rudiments of commerce, how the exchanges of goods and services are carried out and how the value of things is conditioned by the need we have of them and by the supply and demand that exists in each of the situations we face in our daily lives.