What Is Money?
Before anything else — what money actually is, and what it can do.
What is money?
Money is something people use to buy things and pay for services. Instead of swapping a toy for a loaf of bread, people use money — coins and notes — to trade for what they need or want.
The best place to start is with money you can actually hold: coins and notes. You can see them, touch them, count them, save them, spend them, and give them away. That's real, physical money — and it's the easiest way to understand how money works.
What can money do?
Every dollar you have can do one of these things.
Spent
Traded for something you want.
Saved
Kept for something later.
Given
Shared with someone else.
Earned
Received for doing a job.
Why can't we buy everything we want?
Because there's only so much money to go around. Everyone — kids and grown-ups — has a limited amount of money, so we all have to make choices about what to buy and what to skip.
That's really what this whole lesson is building toward: money is limited, so what you do with it matters.
Money has value
Every coin and note is worth a certain amount — and you can count it to know exactly how much you have.
Five $1 coins add up to $5 — the same as one $5 note. It's not about how many coins you have, it's about what they add up to.
Think about it
Have a go at these before checking the answer.
You have $5. You spend $2. How much do you have left?
You have $3 left. Spending money means you have less of it — that's the trade.
You have $5. You could buy a $4 toy, or save the $5 for something bigger. What could you choose?
Either could be a good choice! Buying the toy means having something now. Saving means you're one step closer to something bigger later. There's no wrong answer — it's your choice to make.
What about money on a screen?
Once physical money makes sense, it's worth knowing that money can also be kept somewhere other than your pocket — in a bank account, shown as a number on a screen. A $1 coin, $1 in a bank account, and $1 on a screen are all the same real money, just kept in different places. That's a lesson for later, once coins and notes feel familiar.
You can reinforce this lesson in about five minutes, with five real $1 coins.
Give your child five $1 coins, then ask them to:
- Count the money.
- Choose something they could buy.
- Work out what they'd have left.
- Decide whether they'd rather spend it or save it.
Where to next
Money is the starting point. From here, MyKidsMoney's lessons build toward:
For the full real-world system this is based on — $5 a week, physical jars, and a savings goal your child chooses — see the pocket-money guide.
Next lesson: What Is Income?
Now that money makes sense, the next question is: where does it come from?