We’re on a mission to make every kid smart with money – and our new, in-app Money Missions are designed to build your child’s money skills. Developed with teachers and education experts, GoHenry Money Missions are linked to national financial education guidelines, and feature fun games, quizzes and videos to make learning a fun and interactive experience. You can use your GoHenry parent app to track your child’s progress; when each lesson comes to a close, another one begins and, as your child grows, the levels adjust according to their age, skills and confidence.
Money Basics is the first of our Money Missions topics. If you’re looking to teach your child about the past, present and future of money, you’ve come to the right place. In this lesson, they’ll learn the fundamentals of money management, such as the difference between debit and credit cards. They will also explore how banks work, including how banks can help them reach their money goals (like getting a mortgage or managing debt) in the future.
Who invented money?
Before money was invented, people swapped things that they owned (a bit like trading cards or stickers with friends), or things that they could do, as a way to get what they needed. This was known as bartering, and it worked well – until people realised it was easier to trade small objects like beads, shells or metal rings.
Over time, these small objects were replaced with metal coins, and paper money was invented in China in the Middle Ages. Coins and notes are still used today, mostly because they’re easy to carry around and don’t break.
To learn more about why money was invented, check out our Money Mission about the invention of money and currency.
What different payment methods do we use today?
Today we can choose from lots of different payment methods. There are different types of payment cards, such as debit cards and credit cards, as well as online payment methods like PayPal.
- Cash: Coins and notes were once the only way to pay, and some small shops, market stalls and ice cream vans will still only accept cash. For this reason, it’s a good idea to carry a little cash.
- Debit cards: Most people use debit cards, like your GoHenry card. You can use debit cards to take out cash from an ATM, pay in shops, use contactless, or make payments online.
- Credit cards: Although credit cards look just like debit cards and can be used in the same way, the money that you use to pay is borrowed from the bank.
- Online payments: We can now pay for things online when we enter our card details, and we can also use PayPal or Apple Pay, which are connected to our bank account or card.
- Cheques: Paper cheques aren’t as popular now that we can easily send money online, but sometimes people use them as a way to send money by post – some children might have got one in a birthday card! They’re safer than cash because they can only be used by the person whose name is on the cheque. Before you can spend the money, cheques have to be paid into your bank account.
To learn more about payment methods, check out our Money Mission about different ways to pay.
What’s the difference between debit and credit cards?
There are some important ways to tell if it’s a debit card or credit card, even though they can be used in similar ways:
- Debit card: You can use a debit card to pay for things in shops or online, or to take out money from an ATM. Any money that you spend is taken out of your bank account (or GoHenry account).
- Credit card: A credit card lets you borrow the bank’s money to pay for things in shops or online. This isn’t free money and has to be paid back later, along with a bit extra, which is called ‘interest’. For this reason, you have to be 18 to have a credit card, and they must be used carefully.
Having a debit card or credit card gives you lots of different ways to pay:
- You can pay in shops with contactless by holding your card near the machine until it beeps. But remember, there’s a limit to how much you can spend in one go when using contactless.
- When you spend larger amounts you will need to use Chip and PIN. This means you’ll need to put your card into the machine and enter your four-digit PIN code.
- You can still use cash, too. Put your card into an ATM or cash machine and type in your PIN code to withdraw your money as notes.
To learn more, take a look at our Money Mission about paying with a debit card or credit card.
How do banks work?
It’s important to know how banks work because they store and lend money all over the world.
Many years ago, banks kept people’s money locked away in vaults. Today, most of the money lives digitally on computers rather than as cash, and there are lots of layers of security to keep it safe.
When you put your money into a bank it’s stored in an account, just like your GoHenry account. We use signatures, PIN codes and passwords to make sure that only the person who owns the account can use the money.
To find out more about the importance of banks, take a look at our Money Mission on banking.
How to use a bank account
As well as keeping our money safe, a bank account can help us to save more and keep our money organised.
In the past, people had to visit a bank in person to manage their money, but now they can do this with an app, just like you do with GoHenry. Online banking makes it easy to pay for things, check your account balance, and send money to friends.
If you’d like to know more about how banks work, these are some important words to remember:
Bank Balance: This tells you how much money you have in your account. It’s a good idea to check it regularly so that you know how much you have to spend.
Bank statements: These give you a record of all the money that has gone in and out of your account. Some banks still send these out in the post, but online banking means that all your bank statements are saved automatically to your account, so you can check them in your app or on your bank’s website.
Interest: Banks are a good place to save money as they pay YOU a small amount each month. This is called ‘interest’ and you get this as a thank you for storing money with your bank. Although it’s not much, the more money you save, the more interest you get!
To learn more, check out our Money Mission on bank accounts.
The future of payments and money
Now that so many people pay online and use card and contactless payment options, it’s possible that coins and notes could become a thing of the past. Some countries like Sweden, Finland and China are already trying to become cashless, and you might have noticed that some shops and cafes in the UK will no longer accept cash.
We might even see new types of money, like Bitcoin, which was invented in 2009. This was the first type of cryptocurrency, which is money that is created by a computer and only exists online.
To learn more, take a look at our Money Mission on the future of payments and money.
Want to teach your kids all about earning, saving, and spending money?
Create a GoHenry account and gain unlimited access to our new, in-app Money Missions. These feature fun videos and quizzes, designed to teach kids about finances and build crucial money skills from an early age.