How to Explain to a 7 Year-Old Why You’re Not Rich (and it’s Okay!)

Children are awfully curious about everything including money. When a 7-year-old hears all the great vacations their classmates have gone on or the fancy toys that everyone else seems to have they may wonder, am I rich?

So how do you explain to a 7-year-old why you’re not rich? Wealth is an abstract concept for a child to understand. Experts recommend that you explain money with objects familiar to a child such as ice cream, toys, etc. Explain that while you may not have as much as some people, your lives can be just as happy.

Nobody fully understands why wealth gets distributed the way it does, and it is okay to let your child know that. The best thing to do is help your child cultivate feelings of gratitude for what you do have.

How a 7 Year-Old Understands Money

Money is weird. I mean, it was bad enough when I was growing up and we still used physical money. In those days I saw that my parents would give other adults dirty pieces of green paper and in return would get the latest Nintendo game.

Today, money is an even more abstract concept. Children see their parents run around swiping little plastic cards, or pushing a button on their phone and BAM! They get anything they want.

Try explaining how that card is actually tied to an invisible finite source of cash which in turn is dependent on mom and dad going off to the office every day.

Most adults barely understand how it works. How the heck is a kid suppose to understand?

By the age of 7, most children have a nominal grasp of what money is. They have probably done simple addition with money in school, and they have definitely seen the advantages a little bit of wealth can get you.

A 7-year-old understands what money is used for, more or less how their parents make money, and why money is so important, but they may struggle understanding why some folks have more money than others.

“We are good people.” A 7-year-old may reason. “Why should my classmates have money and not me?” 7-year-old children have a keen sense of justice and when they feel something is unfair, it will bother them.

These questions aren’t easily answered, but here are some strategies on how to address the issue.

Gaining Context

Kids say the darndest things. They ask where babies come from, they ask why the sky is blue, and they ask us why we are so fat. Among the  insulting things they ask us is why we can’t afford to fly to Paris every year.

An important part of helping answer your child’s question is to gain some context as to why they are asking.

Was this question prompted by a discussion your child had with a classmate? Or did they see something on TV? Was your 7-year-old reading the provocative writing of Karl Marx and want to know when the communist revolution would begin? I don’t know, but understanding why your child is curious is key to helping answer their questions.

Let’s take the child who was talking with a schoolmate for example. One day your child comes homes and asks, “Mom, why don’t we ever fly on our private jet to Spain?”

Now, at this point in the conversation, it may be tempting to launch into an in-depth discussion about how the Fed recently raised interest rates which would make it a terrible time to invest in a private jet let alone a trip to Spain, but it won’t likely be very beneficial to your child. Restrain yourself and ask your child why he asked such an interesting question.

As your child explains how his classmates have so many cool stories and souvenirs from the exotic trips they have taken, you realize that this isn’t a question about the Fed’s fiscal policy at all, rather your kid is wondering if cool trips are important to be happy.

Oh you wonderful parent, you! You have just discovered one of the keys to parenting. Listening to your children (or anyone else for that matter) is key to understanding how to best help them out.

What I’m trying to get at here is how crucial a little context can be in helping answer the difficult questions your child has about wealth. If we don’t see where our children are coming from, it can be difficult to guide them to where they need to go.

Context is the ever important backstory essential to understanding your 7-year-old child’s woes. It’s the Star Wars Episodes I, II, and III to your kid’s complaints, but unlike the Star Wars prequels, listening to your child won’t be a complete waste of time.

Cultivating an Attitude of Gratitude

Did you know that grateful people are happier? Seems like a no brainer, but gratitude is something we rarely practice. Don’t believe me? How many times did you complain on your commute to work this morning? How many insults did you silently hurl at your boss as you were slacking off looking for this article?

Children are like mirrors. Try as we might to conceal our negative attitude toward money and those in higher standing than us, children take those attitudes and reflect them right back at us.

In fact, I’m willing to bet that your own intense hatred of the “establishment” stems from your own parent’s grumblings.

Whether that is the case or not, our attitude towards money and wealth will rub off on our children, and we best show them a good attitude if we want them to be happy in life.

When initiating a talk about money with your kids do your best to calm yourself down before hand if you know these kinds of conversations rile you up. Try to give your child straight facts to allow her to come to her own conclusions.

Besides having a good attitude when talking about money, what are some things that you can do to cultivate an attitude of gratitude in your home? Here is a list of some ideas.

  • Count your blessings. It has been said so much that it seems like it belongs exclusively on the back of a get-well-soon card, but there is a lot of wisdom in the old platitude. When was the last time you listed out your blessings? Do you have a car and roof over your head? How about clean clothes to wear and safe water to drink? Yes? Then you are already better off than most people on the planet. You will be surprised how scheduling your blessings can make your worries fly away.
  •  Say please and thank you. Here is some advice that my dear mother pounded into my head ever since I could walk. Outwardly expressing your gratitude is a great way to internalize thankful feelings. Next time you drive your child to school, make sure they thank you on their way out the car door.
  •  Stop Whining. Nothing curtails happiness faster than a well-placed complaint and if there is one thing we humans are good at, it’s complaining. What have you complained about today? Your job? Your spouse? If you haven’t said anything bad about Congress than you aren’t human. Instead of speaking negatively about our circumstances try saying something positive. Your boss may be an idiot, but at least he was nice enough to hire you on. Your loving spouse is the most perfect person in the world, don’t say anything negative about them. You can still complain about Congress though. Those guys suck.

I don’t think I can stress gratitude enough, a grateful child will be much happier than an entitled child no matter how wealthy their family may be.

Talk About Budgeting

Ah yes, budgeting. Most adults don’t actually do it and kids don’t want to hear about it, but talking about it just might talk save your child’s future.

Experts recommend that with any conversation of wealth you devote a little time to talk about budgeting. You may not see much of a point in this, but talking about budgets won’t only help your kid see the importance of having a plan, but will influence how they see their relationship with money.

In my research, I have come across some experts that recommend giving children a small allowance to help them understand the importance of money. Not only will this help them understand the value of a dollar, but it will also help them understand how to save and budget. Maybe it could help them understand their parent’s financial situation a little better.

That seems like a fine idea, but just a simple conversation on the importance of saving would suffice. My parents never gave me an allowance and I seemed to turn out fine. Of course I am an impoverished blogger with mounting student debt, so buyer beware.

Starting Conversations About Money

It seems today that most people are more willing to talk about their weird issues than they are about how much they make. Will happily scream about politics around our Thanksgiving feast, but when someone asks how your new job is paying the table goes silent.

This attitude carries even to our own children. I have known parents that absolutely refuse to discuss anything money related with their kids.

“Mommy, can we go out to eat for dinner every night?”

“Shut up Timmy, I don’t want the neighbors to think we’re poor.”

This taboo we place on money will not only lead our children to have a bad attitude when it comes to money, it may actually worry them. 

7-year-old children are smart, and they can tell if something makes you uncomfortable. I have found that the best way to overcome this taboo is to unsheathe your sword and charge the enemy head-on.

You may feel that because money is tight, it is better not to tell the kids for fear of worrying them, but not knowing what is going on is much scarier than the facts.

If you need to make some budget cuts, include your 7-year-old child in the decision-making process. Explain that things are tough right now, and everybody needs to make a few sacrifices until things get better. Ask your 7-year-old child what they think they could give up in order to help out the whole family. Their maturity and understanding may surprise you.

You could also use these conversation to emphasize the good things your family has and what you would like to have more of. You may not be able to fly to Rome every year, but trips to grandma’s house can be just as fun.

You could also create a family wish list of things that you would like to buy and experience together. Maybe you can’t buy the newest video game system or spend a week in Disneyland, but maybe you can get some Legos and spend a day at the county fair. Once you create your wish list, you can budget ways on how to achieve those goals together. 

Dealing with “Rich Kids”

Kids as early as first grade start to differentiate between “popular” and “unpopular” kids. Now, research says that first and second graders, the age group of your 7 year-old, are more likely to value friendships over popularity, but kids aren’t immune to encounters with the “cool kids”.

7-year-old children aren’t just figuring out how to navigate the world of social complexities and will more than likely need some adult help. Here are some things you can do to help your child deal with the “rich kids”.

First, identify why your kid is upset. Are they jealous? Are they being bullied? I was a very timid child and was upset by anyone that showed the smallest amount of defiance towards an authority figure, for example. Identifying what your child’s issue with these kids is essential to resolving it.

Second, prescribe an appropriate remedy. If your kids is being bullied telling them to suck it up probably won’t help them much. If they are jealous of the athletic abilities of one of their peers, telling them to talk with a teacher won’t do them much good. Instead, let’s practice some of those listening skills that we talked about earlier and help our 7-year-old find a good solution.

Here is some general advice that you can implement when your child is struggling with his classmates.

  • Stopping self-doubt. Kids can get down on themselves even at the tender age of 7. If a child feels inferior to his classmates, then he is more likely to antagonize them. Help your 7-year-old child see that they are a great person with a lot of talent and they shouldn’t speak negatively about themselves.
  •  All people are different. Help your child see that all people are different, but that doesn’t mean they are bad. Just because someone thinks, looks, or acts differently than we do, we can still respect them. And that includes people that may dress better than we do.
  •  Be an example. It’s all well and good to talk about these things with our children, critical even, but you have got to practice what you preach if you want it to be of any lasting importance. How often do you come home from work complaining about a coworker? Do you complain about your husband to your children? If so, is it any wonder that your kid has picked up a similar attitude? Be an example and your kids will follow suit. 


Sadly, most of us will not be millionaires in this life, but that doesn’t mean we are doomed to live a life of depression. We can teach our children happiness even on a humble budget.

Now don’t get me wrong, I’m not saying that it’s going to be a walk in the park, but if you teach your children gratitude things will go smoother I promise.

Money isn’t everything and just because you can’t give your children everything they may want, you will be able to be a great parent which is the greatest thing you could ever do for a child. 

Related Questions

How can I teach my child the value of money? The best way to help you child understand money is with some hands on experience. Either using real or play money, take your child shopping for simple things that they may want like candy.

Help them budget their money so they can buy the things that they want. Through practice, they will be able to learn how much things cost and the importance of managing their money.

Should I let my child have an allowance? An allowance can help give your child get real experience with money. However, I believe money should be earned. Rarely in life will your child be handed money without any strings attatched.

Help teach your child responsibility by giving them extra chores as an opportunity to raise funds for themselves. This will not only give them hands on experience with budgeting, but with work as well.

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