Before you start
Sit down somewhere comfortable with no screens (kitchen table or living-room floor both work). The child sets the pace — if they want to bounce off after 10 minutes, that's fine. The point is to plant ideas, not check boxes.
You will need:
- A small handful of UK coins (mix of denominations — 1p, 2p, 5p, 10p, 20p, 50p, £1, £2)
- A clear jar or plastic cup for the saving activity
- Optional: a few household items (one cheap, one expensive) to use in the "needs vs wants" sort
1Warm-up — what is money?5 min
Spread the coins on the table. Pick them up one by one.
"Let's look at these coins. Can you tell me which is which?"
They'll probably get the big ones (£1, £2, 50p) right and might mix up the smaller bronze coins. That's normal.
"What's money for? What do we do with it?"
Most 5-7 year-olds will say "to buy things". That's the right answer. Acknowledge it — "yes, money is for buying the things we need and want."
2Where money comes from7 min
The big idea for this age: money doesn't appear — someone earned it by doing work.
"Money doesn't appear out of nowhere. It comes from work. When grown-ups do work that helps other people, those other people give them money."
Give one concrete example from your job. "I go to my job. I [what you do]. The people I help give my work to give me money. That money comes into the bank. Some of it pays for food and the house, some of it I save for later."
Take 5 coins (so it's a round number). Place them in a row on the table.
- Move 1 coin away — "this one pays for food we eat at home"
- Move another — "this one pays for the house we live in"
- Move another — "this one pays for things like the gas and the lights"
- Leave 2 — "these two are left for treats and saving"
The exact ratios don't matter. The point: most money is already spoken for before treats. This is one of the most useful ideas a 5-year-old can encounter.
3Needs vs wants6 min
The conceptual heart of the conversation.
"There are two kinds of things money buys. Needs are things we can't go without — food, clothes, a house. Wants are things that are nice to have but we don't need them — toys, sweets, a fancy car."
Pick 6 things in your house or 6 ideas. Take turns: "is a [thing] a need or a want?"
- Apples — need (food)
- A teddy bear — want (nice to have)
- Shoes — need (going outside)
- Sweets — want
- Toothpaste — need (clean teeth)
- A new bike — want (you already have a way to get around)
Don't worry about edge cases (is the second pair of shoes a need or a want?). The point is the categories exist.
4Saving — waiting for something bigger5 min
Final idea: saving means waiting.
Put a few coins in. The child can see them through the side.
"If you want a big treat that costs more than your pocket money for one week, you can save up. Every time we put a coin in, the jar gets a bit closer."
Something small and concrete: a book, a comic, a small toy. Cost between £3 and £10. Work out how many weeks it would take at their current pocket money rate.
There's no right answer to that question. Let them sit with it.
5Closing — the words you used today2 min
Wrap up by naming what you learned.
"Today we talked about three big words: work, needs and wants, and saving. They're grown-up money words, and now you know them too."
After the conversation
Best follow-ups in the next week:
- At the supermarket, name out loud which items are needs and which are wants as you put them in the trolley.
- Add to the saving jar regularly, even with small coins.
- If you have a Junior ISA, mention it: "we have a special savings account for when you're older too — it's called a Junior ISA."
Come back to the conversation in 2-3 months with the same pack. Children remember more than they show in the moment.
UK Tax Drag (2026). Where does our money come from? — a 25-minute conversation pack for ages 5-7. Family conversation pack. Available at: https://kids.uktaxdrag.co.uk/parent-conv-where-money-comes-from.html
CC BY 4.0. Free to share, photocopy and use in classrooms.