“Money comes from trees!” How much do kids really know about money and how to start the conversation?

Money is part of everyday life, but how often do you sit down with your kids and talk about it?

With Talk Money Week shining a spotlight on the importance of talking about money, there’s no better time to get the conversation started with your brood. 

Teaching kids about money doesn’t have to mean boring talks about bills and budgets. Simple conversations about pocket money, saving for a toy or why you can’t always buy something straight away, can help them develop good money habits.

We wanted to find out what children really understand about money, so we invited a handful of kids into the boss’s chair and asked them some big questions.

Their answers were funny, honest and sometimes surprisingly wise.

What is money?

We started with the question: What is money?

One child had a magical answer:

“Money comes from trees.”

If only! Another described money as paper and “expensive golden coin”, while one gave a more grown-up explanation about using money to buy and trade things.

Why not turn your next shopping trip into a little money lesson? Let your child compare prices, count coins or help work out whether you have enough money to buy something.

Is money important?

The children understood that money helps families buy food and pay for essentials such as housing.

But one answer offered food for thought:

“Some cases yes, but in some cases not really.”

Money matters, but it isn't everything. Love, friendship and kindness are worth far more than the size of your bank balance.

You can help your kids understand this by talking about the difference between needs and wants. Food and clothes are essentials, while the latest toy or video game is usually something they'd like to have.

How do people earn money?

One child explained:

“From the mummies and daddies, I think they work jobs.”

Another shared a relatable memory of asking their mum for something, only to be told to wait until payday.

Children often notice that their parents go to work, but they might not understand how wages work or why money has to cover so many things.

Explain how people earn money and what it needs to pay for, from food to household bills. If your child gets pocket money, you could also help them decide how much to spend and how much to save.

Is your family rich?

This question produced some wonderfully honest answers. One child admitted:

“I don't check their bank accounts.”

Fair enough!

Another gave a thoughtful answer:

“No, not like rich as £1,000,000 rich, but rich enough to be able to pay the bills and get food.”

It's a good reminder that being comfortable isn't necessarily about having lots of money. Being able to afford essentials and keep up with bills matters too.

You don't need to share private financial details with your children. Simply explaining that families have budgets and must choose what to spend their money on can help them understand why some purchases have to wait.

How much does a house cost?

The children's guesses ranged from £1,000 and £35,000 to £450,000 and £750,000. Some were certainly thinking big!

House prices, of course, vary depending on where a property is, how big it is and what condition it's in.

Why not look at a few homes for sale together? Compare their prices and talk about why some cost more than others. You could also explain how adults save for a deposit and use a mortgage to buy a home.

How can you make learning about money fun?

You don't need to sit your kids down for a formal lesson. Everyday activities can teach them plenty.

• Play shops: use pretend money to practise counting and giving change.
• Set a savings goal: help them save towards a toy or special treat.
• Get them involved in shopping: compare prices and make choices within a small budget.
• Try a savings jar: let them watch their money grow over time.
• Talk about advertising: explain why adverts encourage us to buy things we might not need.
• Learn from mistakes: if they spend their pocket money too quickly, help them think about what they might do differently next time.

Keep things relaxed and suitable for your child's age. The aim is to help them feel comfortable asking questions and learning as they go.

Start the conversation

Our time with kids in the boss's chair showed just how differently children think about money.

Talking openly about money can help your kids understand spending, saving and budgeting as they grow up.

So, why not ask your children a few questions of your own, like what is money and how do people earn it?

You might get a hilarious answer, learn something surprising or find the perfect opportunity to teach them a valuable lesson.

You don't need all the answers to get started. Sometimes, the best money lessons begin with a simple question.