Children’s inquisitive minds often spark conversations about money and how it works in our lives. As parents, tackling these questions can feel daunting, but providing simple and engaging explanations can lay the foundation for their financial literacy. Here are five common questions children may ask about money, along with expert suggestions on how to address them effectively.

Where does our money come from?

Explaining that money comes from working at a job introduces the concept of earning income. Emphasize that you receive a specific amount for the work you do, reinforcing the idea that money is not infinite and must be managed wisely.

Why can’t you just go to the bank and get more?

Children may perceive banks as magical places that supply unlimited money. Use a trip to the bank or an ATM to demonstrate that the amount of money in your account decreases with each withdrawal, reinforcing the notion of limited resources and responsible spending.

How much does something cost?

Encourage children to bring their own money while shopping to make decisions based on a budget. Letting them experience firsthand the value of money and the need to prioritize their purchases helps develop financial awareness and decision-making skills.

How much money do we have?

When children notice disparities in material possessions, address their curiosity by providing general information about your family’s financial situation. Frame the discussion around the idea that different families have varying resources, highlighting the importance of responsible money management.

Why do things cost what they do?

Introduce the concept of supply and demand by using examples like video games. Explain how pricing depends on factors such as popularity, limited supply, and manufacturing costs. This helps children understand why some items are more expensive than others.



Engaging children in conversations about money at an early age can foster their financial curiosity and establish a strong foundation for future financial literacy. By answering their questions with simple yet informative explanations, parents can empower their children to make informed financial decisions and develop responsible money habits. Encouraging financial discussions at a young age sets them on the path to financial well-being and lifelong learning.