With money you buy things you need to live. Mom and Dad go to office everyday to earn money. When the dates on the calendar are over, Mom and Dad get paid. The money is put into their bank account. They take the money to buy you food, pay your school fees, buy you toys and dresses and medicine when you are ill.
Bank is a place where you put your money so that it is safe from thieves. If you have a lot of money at home it is not safe. If you keep all the money in the locker, a thief can come and break the locker, so banks are to protect your money.
Now that you know how important money is, it is important to save money. When you go out in the rain, you catch cold. When you take all your money out, they are spent. To save yourself from rain, you wear a raincoat, to save your money from getting over, you spend less and only buy necessary items.
LENDING & BORROWING MONEY
When you give from your share it is called lending and when you take from someone else’s share it is called borrowing. Same applies when it is about money. Lending money can be helpful for others but borrowing money can be bad because what if you lose the borrowed money and you cannot return it, then you’ll be called a bad person.
The promise to receive more than what is given is called interest. If papa says, “ If you lend me 10 rupees, I’ll give you 12 rupees, that is 12-10= 2”, then the 2 rupees is the interest you have earned. Often, when people borrow money, they are asked to pay interest which is very bad so, one should always avoid borrowing and save a lot so that one never has to borrow.
Loan is borrowed money. You know that if you borrow money, you pay interest. So with loans, you pay big interest. People take loans to buy house and cars. If you are a good money-saver, you will never have to take loans and pay a lot of interest from where you borrow money.
An insurance helps to replace a damaged good. You have to pay an insurance money to get this protection. Remember, you do not get the money if there is no damage. When you fall sick, you with a Health Insurance you pay the doctor to treat you well. If your car is damaged in accident, you have a Car Insurance. If your parents borrowed money from bank to buy your house, there is a Home Loan Insurance too.
TEACH FINANCE THE FUN WAY
Arrange a couple of items around yourself. Put a price to each one of them. It would be great if you can have similar items of various worth. For example, if it is breakfast time, arrange 5 plates of wholesome food and label it with various price tags. You can make Pizza the most expensive and Bread, Jam & Omelette moderately priced and Kellogg’s with fruits priced the least. Now, the one that you priced the highest, say if it is INR 50, give that money to the child and ask him or her to use it to buy one of the breakfast choices. This way, your kid will learn to evaluate-
- Price versus product
- Investment outcome &
- Learn about savings
You have to watch out if your child is interested in the pizza no matter if he has to return the entire money, or if he decides to go for something that’s wholesome and also helps save money. Not only will your child have fun playing this game, and other lessons that have been already discussed, your child will learn to-
- Allocate about fund allocation
- And that nothing comes for free
You can try this game with every exchange with your child. You can play this during breakfast, lunch or dinner or even when you take your child out on a walk.