Explaining money to a five-year-old: Its value, importance, and earning - M4Money Credit Union

Recently, my five-year old asked me why money is important and how we can earn money to buy the things we want.

I remember that when I was growing up, talking about money was a taboo topic (especially if a girl wanted to know about money). So I never really grasped the concept of money until I was much older.

Reflecting on what my child asked, I thought I would share what I told him. Perhaps it might give you an idea of what you can tell a child who asks you about money without the jargon.

What is money?
Money comes come in notes and coins that helps us buy things that we want or need. Think of it as a tool that allows us to get the things we need and want, such as toys, books, or food.

What is the importance of money?

Value of money

Money is valuable because it represents the work and effort we put into earning it. When we do tasks or jobs for others, they give us money as a reward. This money can then be used to buy the things we need or save for something special in the future. So, money has value because it reflects the hard work and time we dedicate to earn it.

How do people earn money?

Money is earned through work or by providing a valuable service. Adults work in jobs and get paid for the work they do. Some people work in offices, while others work in stores, hospitals, or schools. In exchange for their time and effort, they receive money as their salary.  As a child, you can also earn money by helping with household chores, tidying up your room, or assisting with simple tasks around the house.

By completing these tasks, you show responsibility and contribute to the well-being of the family. Your parents or guardians may give you some money as a reward for your efforts. It’s important to remember that earning money through work teaches us the value of hard work, discipline, and responsibility.

To sum it all up, it’s important to teach children the concept of money. By explaining what money is, its value, and how it is earned, we can help empower children to make informed choices about money, develop responsible spending habits, and work towards their financial goals. You can take the first step of teaching them about money (and saving it) by opening a Junior Savings Account with M for Money Credit Union.