Where Does Money Come From?

Has a curious kid ever asked you, “Where does money come from?” You’re not alone! To children, it often feels like money just appears. Adults swipe cards, tap their phones, or hand over bills, and suddenly, groceries, toys, or clothes appear.

However, understanding where money comes from, and how it works, is one of the most important lessons we can teach children. This knowledge builds a strong foundation for lifelong financial skills. To help you tackle the topic with your child, we’ve broken it down into simple, kid-friendly basics you can explore together.

Why do we have money?

Many years ago, before money was created, people participated in something called bartering to trade for what they needed. Imagine you’re at recess, and your friend has an extra snack. You don’t have one, but you have a toy car you’d be willing to trade. You both decide to switch the car for the snack. That’s bartering. You’re swapping something you have for something you want.
However, bartering only worked when both people wanted what the other had. That’s why money eventually became the system people agreed to use instead—it made buying and selling simpler for everyone.

Who makes our money?

The United States government oversees the creation of money. The U.S. Department of the Treasury prints paper bills and mints coins through two branches:
The Bureau of Engraving and Printing, which prints paper bills
The U.S. Mint, which makes coins

Although money isn’t just printed at random, the government carefully controls how much money is made. Why? Because if too much money is created, it can lead to inflation, which means prices go up too quickly. This makes it harder for people to afford everyday things.

Imagine your school is having a fair and gives out too many prize tickets. Suddenly, everyone has tons of tickets—but there aren’t enough prizes. The tickets aren’t worth as much because there are just too many of them. Money works the same way. If there’s too much of it, its value goes down.

How does money get in our pockets?

Once money is created and put into circulation, people earn it by working. People like teachers who help kids learn, firefighters who put out fires, or chefs who cook delicious meals earn money by doing their jobs. A paycheck is the amount of money they receive for their work, and it’s how they get their share of the money flowing through the economy.

What role do banks and credit unions play?

Once people receive their paychecks, they need a safe and organized way to store their money. That’s where banks and credit unions come in.

These organizations help people store their money, save for the future, and spend it when they need to. When someone puts their money into a savings or checking account, the bank or credit union holds it until they need it. These places also help people borrow money when they need to buy big things, like a car or a house.

A note for parents:

Money doesn’t grow on trees, but it doesn’t appear out of thin air, either. From government printing presses to piggy banks, understanding where money comes from helps kids feel more confident and curious about the world around them. And it all starts with simple conversations at home.
Ready to start your child’s financial journey? Opening a youth account at Bay Federal Credit Union is a great way to help your child begin their financial journey with real-world practice in saving, spending, and earning.

Points for discussion:
Do you know what job your parents do to earn their paycheck?
If you got to create your own kind of money, what would you call it?
What kind of chores do you do to earn your own money? 
How does having money help you? Can you think of a way that your money helps others?