Money Glossary for Kids

Money a kid gets regularly from a parent — usually weekly or monthly — for being part of the family or doing chores.

"Your allowance is $5 every Saturday."

A machine that lets you take cash out of your bank account. It stands for "automated teller machine."

"The ATM gave me twenty dollars out of my bank account."

The amount of money you have in a jar, piggy bank, or account right now.

"Your savings balance is $42."

A place (real or online) that holds money safely and pays interest on savings.

"We deposit your allowance at the bank so it earns interest."

To take something (often money) that belongs to someone else with a promise to return it.

"If you borrow $5 from your allowance next week, you have to pay it back."

A plan for how to use your money — how much to spend, save, and give — before you spend any of it.

"Your birthday party budget is $100. Let's plan together."

Physical money — paper bills and metal coins you can hold.

"We're paying in cash today."

An organization that helps people or causes. Giving to charity means donating money to help others.

"Your give jar pays for the animal shelter this month."

A paper from your bank account that tells another person how much money to take. Most people use cards or apps now instead.

"Grandpa wrote you a check for your birthday."

A bank account used for everyday spending — your allowance goes in, your spending comes out.

"Your checking account is for the things you buy this week."

Interest that earns interest on itself. Your money grows, and then the growth also grows.

"Save $10 a month for 10 years and it becomes $1,700 because of compound interest."

Borrowed money you have to pay back later. Using credit means buying something now and promising to pay the bank later.

"Credit isn't free money — you always pay it back, usually with extra."

A card from a bank that lets you borrow a little at a time. You have to pay it back every month or the bank charges you extra.

"A credit card is borrowing. A debit card is your own money."

A card attached to your own checking account. When you tap it, money comes out of your account right away.

"Tap the debit card. See? The money came out of our account."

Money you owe to someone else.

"If you borrowed $5, you're in debt $5 until you pay it back."

Putting money into a bank account or savings jar.

"Let's deposit your allowance into your save jar."

To give money or things to someone who needs them, without expecting anything back.

"We donate your give jar to the food bank every three months."

To get money by doing work.

"You earned $3 for walking the dog."

Something you spend money on.

"Our biggest expense this month was gas for the car."

A thing you want to save up for. Goals make saving feel real.

"Your goal is the $24 Lego set. Eight weeks to go."

The full amount you earned before any taxes or deductions come out.

"You earned $100 gross. Net — what you take home — is about $80."

Money that comes in. For kids, income is usually allowance or chore money. For adults, it's usually a job.

"Your income this week was $5 allowance plus $2 for dog-walking."

When things slowly cost more over time. The candy bar that cost $1 five years ago might cost $1.25 now.

"That's why the same toy is more expensive than it was when I was a kid — inflation."

Extra money the bank pays you for saving. Or extra money you pay the bank for borrowing.

"Your save jar earned 5% interest — that's $2 added to your $40."

To put your money somewhere (like stocks or a business) hoping it grows bigger over time.

"Investing in a company means you own a tiny piece of it."

Money that someone lends you, which you must pay back — usually with interest.

"A car loan means the bank buys the car and you pay them back over years."

Things you must have — food, a home, medicine, school clothes.

"Your lunch is a need. Candy at lunch is a want."

The amount you actually keep after taxes and deductions come out. The "take-home" money.

"Your gross pay was $100, but your net pay was $82 after taxes."

What you give up when you choose one thing over another.

"If you spend $5 on candy, the opportunity cost is the $5 toy you can't buy later."

The original amount of money you saved or borrowed, before interest was added.

"Your principal is $100. After a year at 5% interest, you have $105."

Money left over after you pay for everything. Income minus expenses.

"You sold $10 of lemonade and the cups cost $2. Your profit was $8."

A paper (or email) that proves you bought something. Save these in case you need to return the item.

"Keep the receipt — you might return it tomorrow."

To keep money for later instead of spending it now.

"You saved your allowance for four weeks. Look how big the jar is."

A bank account meant for storing money you don't want to spend yet. Usually pays interest.

"Your savings account pays 5% interest on whatever's inside."

To use money to buy something.

"You can spend $2 from your spend jar today."

A tiny piece of a company that you own. If the company does well, your stock can be worth more.

"We bought one share of Apple so you can see how stocks work."

Money the government collects from people and businesses to pay for schools, roads, and other shared things.

"That's why a $1 candy costs $1.07 — the 7 cents is tax."

Any time money moves — whether you buy, earn, save, or give it.

"Every deposit and every purchase is a transaction in your account."

Things you'd like to have but don't need.

"A new game is a want. Dinner is a need."

All the money and valuable things a person owns added together.

"Wealth grows slowly, from saving and investing over many years."

To take money out of a bank account or savings jar.

"Let's withdraw $20 from your savings for the trip."