How to Explain Foreign Currency to Kids

December 30, 2013 by

Over the holidays we had very dear family friends visit us from abroad.  They gave our kids money instead of gifts.  Our children were so excited and didn’t realize that they got Euros instead of Canadian dollar bills. All they talked about was the toys they will buy.

I thought it was time for a money lesson before we head out to the store. We explained that different countries use different currencies, and that sometimes several countries may use the same currency like Euro.  Also we explained that they cannot buy anything in Canada with Euros, and that they have to exchange Euros for Canadian dollar bills.  We compared Euro bills to the equivalent Canadian bills. We also showed them some American currency and compared it to Canadian.

Image courtesy of graur razvan ionut / FreeDigitalPhotos.net

Image courtesy of graur razvan ionut / FreeDigitalPhotos.net

The kids were over the moon when they realized that due to the exchange rate they received more Canadian money than Euros. We tried explaining that Canadian dollar can be worth more or less than other currencies due to the exchange rate. I’m not sure if they heard or understood that. The excitement was too great.

Before heading out to the store to buy toys, I made sure that they put away two thirds of the gifted money into their long term savings.  I made a point of explaining again why it is important to always save some of our money and not spend it all at once.  I just could not bear seeing them spend all that money on plastic junk that they eventually ends up in pieces.

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