Teaching Financial Literacy

If you could teach financial literacy to children, what would you teach first? The idea behind it or the techniques to implement?

Start with the ideas. Technique without a structure doesn’t solve much.

Start with the idea of money

Money is about what it means not what it is. Money was invented to allow people to make their lives easier. It’s for using. It isn’t a thing by itself.

Money has three purposes:

  1. A way to facilitate trading. It is hard to trade your work for something you want unless the other person wants your product. Money lets you trade your work to someone who wants it then trade the money they give you to someone who has what you want. We still live in a barter world, but money hides it.
  2. A unit of account. A way to keep track. If a pair of shoes costs $200 we know what that means. We could understand the meaning of an identical pair at another store for $180.
  3. It is a store of value. A fisherman cannot hold on to his catch for long even if he doesn’t want to trade for something else today. He trades for money and keeps the money until he wants to trade it for something.

Learn some vocabulary.

Buy – to trade money for something

Sell – To trade something for money

What is money for?

  1. It’s for trading. Eventually!
  2. It’s an abstract way to compare value.

Once you get that, you should learn how to get money.

How do you get money?

Remember money is about trading. If you want money you must trade something to get it.

You trade your resources for money.


Resource – Something of value

Everyone has things they can trade to get money. In the begininng people trade their time, their skill, and their energy for money. Once they have some money they can trade the use of their money (invest) and get money for that.


Invest – to trade the use of your money for an expected return of more.

How to get money in the beginning

Think through how you trade to get money. It makes sense to optimize the value of what you have to trade.

Time matters. If you work 50 hours a week, you should reasonably expect to earn more than if you work 40 hours. Working longer hours is a factor that sometime people overlook when comparing what one job pays compared to another.

Skill matters. If you bring more skill to your work, you should expect to earn more. Doctors make more per hour than welders and welders make more than common labourers.

You must consider how rare the skill is too. There is little advantage to acquiring great skill in an area where the skill is becoming common or unneeded or performed by machines. Some skills become obsolete. Some skills give personal satisfaction but not much money.
In the beginning look for things in demand and a short labour market.
If you can sell your skill to just one person at a time, you must earn less. That’s why musicians stream tracks or sell CDs or perform concerts in a stadium. One performance, many sales.

If you ever wonder why an NFL quarterback can make $25 million a year it is a combination of rare specialized skill and the ability to trade that skill to someone who can resell the one performance to many people.

Think how you could make your skill resaleable.

Energy. Think about energy. Some people get more done in an hour than others. Employers notice. If there is a business turn down and someone must leave, it will not be the high energy person. Earning money is about more than the rate per hour. Look at ways to get more hours and eventually a higher rate of pay.

Don’t forget attitude. Customers like a cheerful and helpful attitude. Employers do too. Think about what you like and want when shopping.

Learn more about how to get money before you decide what to do with it.

The big point most people miss.

One talent is not enough. People who are successful have a constellation of skills. They don’t have to be highly developed just mutually supporting. Some of them can be acquired by accident but it’s better if you know what the skill is and why it helps you. Consider the ability to communicate. In writing or by speaking. People who communicate better do better.

Listening is part of communication. Learn to hear what others are telling you. People say you have two ears and one mouth for a reason. You learn while you are listening.

Think about other skills that support your primary skill. Leadership. Persuasion. Basic finance. HR.

Every job you have, no matter how unskilled, will help you understand what works. Treat every hour of every shift as a chance to learn important and useful skills.

What’s financial planning for?

Financial planning is a way to optimize the use of the money you have and can get. It is about tools and purposes.

We’ll deal with those in more detail tomorrow

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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