If you have children, you know kids are question-asking machines. But the questions kids ask about money can be tough to answer—especially if we (as parents, teachers, and guardians) are not confident in our own financial literacy. How do you explain the stock market to a first grader if you don’t understand it yourself?
But (as we learned from Cabaret) “money makes the world go round,” so it makes sense that kids are curious about the stuff. And while it’s tempting to say, “None of your business” or “You’ll understand when you get older,” these moments are great opportunities to teach valuable financial lessons.
How to Handle Not Knowing the Answer
Talking about money is important. In fact, according to the experts at Greenlight (the Maps partner that offers a debit card and money app for families), studies show that when parents and kids actively discuss money at home, kids are more likely to have positive financial outcomes in early adulthood (ages 18-25). The key is to keep your answers simple and straightforward.
You don’t even need to have all the answers—and it’s okay to admit when you’re stumped. Instead of stressing over it, turn it into an opportunity for research and discussion. When you don’t know the answer, be honest. Tell them, “I don’t know that. Let’s figure it out together.” Then, get curious. Ask your kids questions. Doing so encourages their critical thinking and reasoning skills while sparking meaningful conversations. You might even discover the reasons behind their money questions in the first place.
Here are some common money questions kids ask, along with some simple ways to answer them.
1. Where does money come from?
What to say: Money comes from different places. The coins and paper bills we spend are made by the U.S. government. We call that “cash,” but most of the world’s money isn’t cash. It lives in banks and moves around the world electronically when people use cards or apps. But, in order to spend money, you have to earn it, and most people earn money by working, running businesses, or selling things.
Follow-up Questions:
- Where have you seen money used before?
- Why do you think money is important?
- Where do you think we get the money we spend?
RELATED: The History of Money
2. How do people get money?
What to say: Most people earn money by working at a job. Some people get paid to do specific tasks, like mowing a lawn or babysitting. Others own businesses and make money by selling things. There are also ways to get money as gifts, like on birthdays, or by saving and investing money so it grows over time.
Follow-up Questions:
- Have you ever earned money? How did you get it?
- What kind of jobs do you think pay people money?
- Can you think of a way to earn money yourself?
3. Why do we need to make money?
What to say: We need money to buy things like food, clothes, and a place to live. Money also helps pay for things like schools, doctors, and fun activities. If we didn’t make money, we wouldn’t be able to afford the things we need or want.
Follow-up Questions:
- What are some things our family spends money on?
- What are some things we don’t need money to get?
- What do you think would happen if people didn’t have to work for money?
4. How much money do you make?
What to say: How much someone makes depends on their job, experience, and skills. Some people make more because their job requires special training or is in high demand. The important thing isn’t just how much money someone makes but how they use it—saving and spending wisely helps people afford the things they need and want.
Follow-up Questions:
- What kinds of jobs do you think pay a lot of money? Why?
- What kind of job would you like to have when you grow up?
5. What happens when we put money in the bank/credit union?
What to say: When you put money in a bank or credit union, it’s kept safe, and they help keep track of how much you have. Some types of accounts even let your money grow by earning interest, which is like a small reward for saving. You can take your money out when you need it, but saving helps you afford bigger things later.
Follow-up Questions:
- Why do you think people put their money in a bank instead of keeping it at home?
- What would happen if you saved up your money for a long time?
- Do you think it’s better to spend money right away or save some for later?
5. Why can’t we just go to the ATM/bank when we want money?
What to say: The ATM doesn’t give out free money—it only gives us the money we’ve already earned and put in the bank. If we take out too much, we might not have enough left for important things later. That’s why we have to be careful about how we use our money.
Follow-up Questions:
- Where do you think the money in an ATM comes from?
- What do you think would happen if we took out all our money at once?
- How do you think people decide when to spend or save money?
6. Can’t you just use your credit/debit card?
What to say: A credit or debit card isn’t free money—it’s just a different way to use the money we already have. A debit card takes money directly from our bank account. A credit card lets us borrow money, but we have to pay it back later. If we don’t, we have to pay extra, so we have to be careful about how we use it.
Follow-up Questions:
- What do you think happens when I swipe my card at a store?
- How is a debit card different from a credit card?
- Why do you think it’s important to keep track of how much money is in a bank account?
7. How do credit cards work?
What to say: A credit card lets people borrow money to pay for things, but they have to pay it back later. If they don’t pay it back in time, they have to pay extra because of something called interest. That’s why it’s important to only use a credit card for things you can afford to pay back soon.
Follow-up Questions:
- What do you think is the difference between using a credit card and using cash?
- Why do you think people have to pay extra if they don’t pay back credit card money right away?
- Have you ever borrowed something and had to return it? How is that like using a credit card?
8. Why can’t we have [fill in the blank] like my friend’s family?
What to say: Every family makes different choices about how they spend money. Some families spend more on things like toys or vacations, while others save for things like a house or college. Just because one family has something doesn’t mean they don’t have to make trade-offs somewhere else.
Follow-up Questions for Parents:
- What do you think are the most important things we need to buy?
- If you had $20, what would you spend it on? Would you save any?
- Have you ever wanted something but decided to wait or save up for it?
9. Are we rich or poor?
What to say: Being rich or poor isn’t just about how much money someone has—it’s also about how they use it and what’s most important to them. Some people have a lot of money but still struggle with expenses. Others don’t have as much but live comfortably because they budget and make smart choices. What matters most is making sure we have what we need by using our money wisely.
Follow-up Questions:
- What do you think it means to be rich?
- Besides money, what are some things that make people feel happy or successful?
10. What is the stock market?
What to say: The stock market is a place where people buy and sell small parts of companies. These are called stocks, but let’s use a metaphor to make sense of that. Let’s say you and your friends want a big cake, but it’s too expensive for one person to buy. You decide to split it into smaller pieces and sell those slices to everyone who wants cake. Each person who buys a slice now owns a part of the cake. If the cake becomes super popular and more people want a piece, the value of each slice goes up, and you could all sell your slices for more than you paid. But if people lose interest in the cake, the slices might not be worth as much. The stock market works the same way—except instead of cake, people buy and sell small pieces of companies
Follow-up Questions:
- If you could own a small piece of any company, which one would you choose?
- If you owned a piece of a company, would you want to sell it right away or wait to see if it becomes more valuable?
11. What is inflation?
What to say: Imagine you have $1. Today, you can buy a candy bar with that dollar, but maybe next year, the price of the candy bar goes up, and now it costs $2. That means your $1 can’t buy as much as it used to. This happens because the prices of things slowly rise over time—that’s called inflation, and it happens for many reasons. Sometimes, it just costs more to make things. Sometimes, more people want to buy the same thing, but there isn’t enough for everyone. When lots of people want something—like a popular toy at Christmas—stores know they can charge more because people are willing to pay extra to get it. This is called demand. When demand is high, but supply is low, prices go up. That’s another way inflation happens! And that’s why saving money is important—so we can still afford things when prices go up!
Follow-up Questions:
- Have you noticed that some things cost more than they used to?
- How do you think people can prepare for inflation?
Talking to kids about money doesn’t have to be complicated. By answering their questions in a clear and thoughtful way, you can help them build a healthy understanding of how money works—and set them up for smart financial habits in the future. Most importantly, remember that when you don’t have an immediate answer, it’s okay to say, “That’s a great question! Let’s figure it out together.” Teaching kids about money isn’t just about giving them information—it’s about sparking the conversations that will help them make good financial choices for life.
Want more tips on teaching kids money management skills?
- Discover some hands-on tips to help kids save, spend, and earn at any age.
- Learn how to help your child build good credit early.
- Find out whether a savings account for a baby is a good idea.