Teach key money words for kids and build strong saving, budgeting, and spending habits. Discover ten simple financial terms every child should know.
Introduction
Hi, I’m a busy mum of six, part-time lunch-packer, full-time referee, and the unofficial banker of our household. Between managing homework, grocery lists, and endless snack requests, I realised something that completely changed how we talk about money at home. My kids could recognise coins and even tap contactless payments, but they didn’t really understand what words like budget, interest, or savings meant.
That gap made me think hard about how children learn money language. Without understanding the basic money words for kids, how can they grow into confident spenders and savers? So, I decided to incorporate financial vocabulary into our family life.
In this guide, I’ll share ten simple money words for kids that every parent can teach at home. You’ll learn what each word means, how to make it stick through fun activities, and how these small lessons build lifelong money confidence. Whether your child is five or fifteen, these words will help them understand that money is more than numbers; it’s about choices, goals, and habits that shape their future.
Why Introducing Money Words Is a Real Problem
Many children learn to recognise coins, but they do not grasp what the words around money really mean. According to the Federal Deposit Insurance Corporation (FDIC), children learn about money by observing and by doing, and they benefit greatly when parents include them in simple financial talks. FDIC
In our home, we had a small disaster: my 9-year-old daughter saw the word loan on TV and asked, “What’s a loan, mum?” I realised we had missed some foundational vocabulary. Without a clear understanding of words like budget, income or interest, our children would be blindsided by future money decisions. So I pulled together the ten terms I now teach regularly, and you can too.
Key Takeaways
Before we dive in, here are the main things you will learn:
- The ten essential money words for kids that build financial understanding.
- Why each word matters and how it connects to real life.
- Easy activities and visuals you can use at home to teach these words.
- How to link vocabulary to our family savings and spending habits.
The 10 Money Words for Kids You Should Teach
1. Budget
Definition: A budget is a plan for your money, showing what you will spend and what you will save.
Why it matters: The Jed Foundation explains that knowing words like budget helps to reduce money anxiety. The Jed Foundation
Family story: Every Friday, I sit with our children and we draw up a mini-budget for their pocket money. They decide how much they save, spend or share.
Activity: Use a chart with “Save”, “Spend”, “Share” columns and let them pick amounts.
2. Income
Definition: Income is the money you receive, often from work or allowance.
Why it matters: If children understand income, they realise money isn’t just “given” but comes from effort.
Family story: When our eldest helped with a weekend baking sale, I called the money she earned “income” and explained how it differed from gifts.
Activity: Label their weekly allowance as “income” and track it in a simple worksheet.
3. Expense
Definition: An expense is something you spend money on.
Why it matters: If kids recognise expenses, they start to see where the money goes. The University of West Florida’s financial literacy resource emphasises this term. University of West Florida
Family story: I asked our 7-year-old to write down one expense she had this week (a comic). She recorded it and felt empowered.
Activity: Write down one expense every shopping trip and compare it to savings.
4. Save
Definition: To save means putting money aside for later rather than spending it now.
Why it matters: This is key to creating long-term money habits.
Family story: We set up jars: red for spend, green for save. Our kids now know which jar is for saving, and they celebrate when the green jar fills up.
Activity: Let them pick a goal and label their savings jar accordingly.
5. Interest
Definition: Interest is extra money you can earn when you save, or extra money you must pay when you borrow.
Why it matters: The GoHenry blog lists interest as a must-know term for kids. GoHenry
Family story: I explained interest by offering our child a “bonus penny” if she left one coin in the jar. She watched how it grew and exclaimed how powerful interest was.
Activity: Start a slow bonus system to mimic interest (e.g., every four weeks, add a coin picture).
6. Credit
Definition: Credit is the trust or arrangement where you borrow money and pay it back later.
Why it matters: Credit is often adult language, but children need to know what it means for future spending.
Family story: My 12-year-old asked about a credit card ad. We discussed what credit means and how it differs from money you already have.
Activity: Use a role-play scenario where a child “borrows” a coin and must “pay it back” with a promise of interest (toy version).
7. Debt
Definition: Debt is the money you owe someone else.
Why it matters: Without understanding debt, kids may grow up unaware of borrowing risks.
Family story: We discussed after our 15-year-old got a small loan for a bike. He researched how long it would take to pay it off and used his savings jar to track the payoff.
Activity: Write down “debt” and list what it means in everyday terms (e.g., owing a sibling).
8. Wants vs Needs
Definition: A “need” is something essential you must have; a “want” is something nice-to-have.
Why it matters: This simple distinction helps children prioritise spending and saving.
Family story: On a shopping trip, our 8-year-old asked for two toys. I asked which one was a want. She chose wisely, and we talked about needs.
Activity: Create two jars: one labelled “needs” and one “wants”. Let your child divide items accordingly.
9. Deposit
Definition: A deposit is money you put into a bank or savings account.
Why it matters: Children need to see savings being transferred into secure places, not just jars.
Family story: When we opened a children’s savings account, I explained the first deposit and how the bank looked after it. They clapped!
Activity: Make a bank trip with your child and show them where deposits go, as per the Consumer Financial Protection Bureau glossary.
10. Goal
Definition: A goal is something you aim to achieve, usually by saving or planning.
Why it matters: Without a goal, saving becomes meaningless.
Family story: Our family sets monthly savings goals. The kids pick their target (new game, bike helmet) and we chart progress. They love the sense of achievement.
Activity: Use a visual goal meter (e.g., filling up a picture) to mark progress towards their savings target.
How to Use These Money Words at Home
You now have ten essential money words for kids. Here are ways we integrate them into everyday life:
- Weekly mini-family meeting: We review our allowance, talk about what each child saved, spent and what their goal is.
- Visual tools: Use jars, charts, or apps such as the GoHenry app so children can track income, savings, and expenses themselves.
- Real examples: When paying bills, I explain, “This is an expense for the family”, and my kids ask questions.
- Link to other resources: For example, for more ideas on allowance and saving, check our guide on Pocket Money.
Why Teaching These Words Early Works
Teaching this vocabulary builds financial literacy. The earlier children know words like budget, deposit, and goal, the more confident they become when making real decisions. Experts say that early financial education reduces long-term money anxiety and helps kids feel in control. The Jed Foundation
In our home, we’ve seen the difference. Our big family includes kids aged 5 to 16. The younger ones now ask, “Is that a need or a want?” before buying sweets. The older ones use savings apps and digital bank accounts. It all started when I decided to teach simple money words for kids and make them part of a conversation.
Conclusion & Call to Action
Teaching money words for kids might seem small, but it’s one of the most powerful financial lessons we can give our children. When kids understand terms like budget, save, interest, and goal, they stop seeing money as something mysterious and start viewing it as something they can control. These simple conversations are the building blocks of financial confidence.
In our home, I’ve seen firsthand how learning money words for kids changes everything. My youngest now proudly explains the difference between “wants” and “needs”, while my older ones track their savings, compare prices, and even ask about interest rates. It’s not because they’ve become experts overnight, but because we made money talk part of everyday family life.
You can start the same way. Choose two or three money words for kids from this list and talk about them tonight over dinner. Ask your child what they think each one means, then show them a real-life example from your own day, whether it’s paying a bill, saving for a treat, or planning your next family holiday. Each small conversation adds up to confidence.
If you’d like to take the next step, explore our related guide on pocket money tips and how much kids should save. Together we can raise a generation of children who understand money, make smart choices, and feel empowered every time they save, spend, or share.
Let’s make financial literacy fun, simple, and part of family life, one money word for kids at a time.
