How to answer kids questions about money
21 May 2025
Curiosity about money and personal finance often begins long before adolescence. Kids start asking questions early, but talking about money isn’t always easy. We would like to help you tackle some of the most common questions children have about money.
Tips to explain money to a child
From a very early age, children are playing shop with pretend money. They see you paying for things with money and a card and see that you get things for this. Explain that money is exchanged for goods or services, you get something in return when you give it to someone.
Playing shop is a great way to teach kids the way money works. The shop gets to keep the money while you can take the groceries home.
Are we rich?
This is a common query because a lot of kids are hyper-aware of the world around them. Ask them to explain what ‘rich’ means. This gives you a sense of how to answer their question, are they asking because they see how celebrities live or are they asking if you have more money than their peers? Tell them that we are richer than some and poorer than others, that is the case for everyone! Explain what rich means for your family. Explain what ‘rich’ means to you.
How much do you get paid?
According to research carried out by Bank of Ireland, 70% of people don’t talk about their finances at all or will only do so if they have to. We are particularly reluctant to share our financial information with our children, partially because they love to repeat everything you say! This is a valid question and shows that your kids are making an association between working and earning. Explain to your kids that you work so that you can earn enough to pay for your needs – utility bills, food but also the occasional fun things like days out, treats and holidays.
Can I buy anything I want?
This is a great opportunity to talk about the difference between needs and wants with your kids. Explain that wants are things you wish you had but can live without, while needs are things you cannot live without and need to survive. Explain that your money must go on your needs first.
A shopping list is a great way to compare needs versus wants. We need bread, milk and chicken but we don’t need chocolate, crisps and jellies. They’re wants.
Why can’t you just print more money?
If only it was that easy! – That’s what you might say ... explain to your kids that the more money printed, the less value it has. For example, if the teacher gave everyone in your class a sticker and continued to print more and more until everyone has 100 stickers each, the sticker loses its value. It is the same with money, if more money was printed, it would mean money would become less valuable and the price of everything would increase! This is called inflation – but that’s a conversation for another day!
Discussing money with children can be a challenging but rewarding experience. By addressing their curiosity with simple, honest explanations, you can lay the foundation for healthy financial habits and a deeper understanding of how money works. Remember, kids may not fully grasp everything at once, but by offering clear answers to their questions about wealth, work, needs versus wants, and the value of money, you can help them develop a more responsible attitude towards money. Teaching children about finances early on sets them up for a future of informed decision-making, financial literacy, and confidence in managing their own money.