Explain Like I'm 5: Can These Experts Explain Complex Money Terms?

Added: 2026-05-31

[00:00:00]Today, we're challenging a bunch of people to explain complex finance terms with just one caveat. Could a five-year-old understand what they're saying? The best part will be right next door watching their every move. Too much jargon, waffle, or complicated language, they'll get the buzzer and have to start again. But if they nail it, they'll hear this. As a mom, I know this is harder than it looks. So, for this video, we've teamed up with GoHenry, the smart money app and card for kids that sets them up for future money success. Right, time to go next door and see how they get on.

[00:00:38]>> What is a budget?

[00:00:41]>> So, a budget is when you have a certain amount of money that you either have or want to spend. So, you plan what you're going to spend that money on.

[00:00:51]Um it could be treats, it could be things you have to buy. So, you combine all of those things um and that will tell you how much money you can spend so you don't go over it.

[00:01:00]>> Got it.

[00:01:01]>> All right.

[00:01:02]Okay, a budget is where you have uh >> pocket money >> a pot of money like from your piggy bank. How much you have in your piggy bank?

[00:01:11]>> Yes, how much you have.

[00:01:11]>> buy a bunch of different things. So, you write down how much you think each thing will cost.

[00:01:20]And then when you buy those things, you stick to your plan and you spend you don't spend over that amount for each thing.

[00:01:29]>> Yeah, I like that.

[00:01:30]>> That's good.

[00:01:32]>> What is a savings account?

[00:01:35]>> Uh a savings account is just like a piggy bank um but it's um it's at a bank. So, you you take your money to them or you you can pay in money on your phone and they look after it for you and um they'll normally pay you a little bit to look after because because they're they get to hold your money so they'll sort of pay you a little bit in return.

[00:02:00]>> Yeah, nice. Yeah, I like it.

[00:02:03]Lovely. The relief on his face is his shoulders are slightly like loosening now.

[00:02:09]>> A savings account is like a piggy bank that you put your money in.

[00:02:14]And normally, the money you're putting into that piggy bank is for a specific reason. So, it might be that you want to save up for a new toy.

[00:02:22]>> Ooh, we've got a savings goal.

[00:02:23]>> Yeah, she's first one to sort of put a a goal attached to >> Or you want to save up for a day out.

[00:02:31]And that money is there and set aside and is different to the money that you might want to spend every day on everyday spending.

[00:02:40]>> What is investing?

[00:02:43]>> [laughter] >> Oh god.

[00:02:46]>> Investing is where you grow your money.

[00:02:54]So, you give some of your money to uh somewhere.

[00:03:05]To someone else, like a bank or a business.

[00:03:10]And they use that money to grow more money, and then they [music] give you some money back.

[00:03:14]>> Mhm.

[00:03:16]Yeah, that was that wasn't very good.

[00:03:17]>> [laughter] >> Investing.

[00:03:21]That's where you have you have some money, but you'd like to have some more money. So, you give it to somebody who you you believe in or a company that you believe in, and [music] you hope that they will be able to take your money and and grow it a bit.

[00:03:39]>> It's like a way of making money because you believe in something, and you want to support whether it's like a business that's doing lots of like green initiatives, or you know, you just love that product.

[00:03:48]>> Yeah.

[00:03:49]>> It's It's the There's a There's a wholesome side to it.

[00:03:52]>> [laughter] >> Capital risk.

[00:03:55]>> Sometimes, maybe you picked the wrong people and or the wrong company to invest your money with, and they actually might lose some of it or lose all of it because they weren't quite as as good as you thought they were or they had some bad luck or something like that. So, investing can go both ways. Your money might grow or it might shrink.

[00:04:19]>> I have such [laughter] like a distinct memory of my mom teaching me what a share was when I was a kid, but I feel like the more we went down the rabbit hole, we both just got so confused.

[00:04:28]>> That's why things like GoHenry is such a useful tool for parents. In the app, they have these bite-size lessons called money missions, which cover things like budgeting, saving, and even investing.

[00:04:38]My kids love them, and it's a great support for parents.

[00:04:41]>> And speaking of a messing, haven't they just launched a kids investing account?

[00:04:46]>> Yeah, and it's not as crazy as it sounds. They've launched a junior stocks and shares ISA, where parents can open for their kids as young as six.

[00:04:53]>> Does that look like an adult ISA?

[00:04:56]>> It's very similar. Parents can invest up to £9,000 a year in a junior stocks and shares ISA, and any profit that they make from it are completely tax-free.

[00:05:05]>> Mm, like imagine essentially investing from as young as 6 years old. I feel like that's half the battle with these like wealth-building strategies, isn't it? It's like you really want to start as early as possible and build your savings through like compound interest or whether it's through your investments, just for as many years as you can.

[00:05:25]>> Yeah, and you don't have to start with much. So, you can open the GoHenry ISA with just £1, and then you can keep saving, watch your money grow as your kids do, and you've set them up nicely for the future.

[00:05:35]>> Ah, so nice.

[00:05:37]>> What is a share?

[00:05:41]A share is a portion of a company.

[00:05:48]So, if you take a company, you divide up in most of those little slices like a cake, each slice is one share. You can own a portion of that cake of that company.

[00:06:03]>> What is a share?

[00:06:05]>> Okay.

[00:06:05]>> [laughter] >> That's racist, yeah.

[00:06:07]>> Sad.

[00:06:08]>> She was like, how dare you ask that question?

[00:06:12]>> So, for example, if you have a pizza, >> Oh.

[00:06:15]>> whole pizza and you >> She did the circle.

[00:06:17]>> ask pieces come and then we slice up.

[00:06:18]You slice up the pizza into equal portions or different portions and you take a slice of pizza, that's your share of the pizza. So, a share in finance terms could be that you've a company is sliced up into pizza slices and you get a slice of the pie, slice of the pizza.

[00:06:38]>> Nice.

[00:06:38]>> Yeah, I do like that.

[00:06:40]>> Oh, yeah.

[00:06:41]Got a lot of pizzas.

[00:06:42]>> What does it mean to diversify your portfolio?

[00:06:47]>> A little bit flustered there.

[00:06:49]>> Um >> For a 5-year-old?

[00:06:53]>> [laughter] >> Um okay, so um Okay, so for example, you're in school and you have a group of friends.

[00:07:05]This is probably I don't think it's going to work, but a group of friends and you you like dinosaurs, you like Pokémon and you like football.

[00:07:13]And you've got a few different friends that have similar interests to you and some that don't. It's a good idea to have be friends with all of them so you can No, start again.

[00:07:26]Um >> So, this is about variety. So, when you're putting money in companies, you don't necessarily want everything to be the same. It's like when you have food, you You want to have the same type of food all the time. You want a mixture, you want different types of food, you want different types of sweets.

[00:07:46]So, by getting a range of different things in your portfolio, you you are safer and also you have more um more access to different things.

[00:07:58]>> I think yeah.

[00:08:00]>> I think >> That's the topic.

[00:08:02]>> Yeah.

[00:08:02]>> What is capital gains tax?

[00:08:06]>> [laughter] >> That was really evil laugh from our fan here.

[00:08:10]>> [laughter] >> I just sound so stupid now I'm thinking about it.

[00:08:18]How do you even I mean you have to explain tax to a 5-year-old first.

[00:08:21]>> Should I assume that they that this 5-year-old knows what tax is or do I need to [laughter] explain it?

[00:08:26]>> [gasps] >> Oh my god.

[00:08:32]Capital gains tax is when you you've you've got you've made a lot of money for some reason perhaps you've um >> Just made some money? Just abstract.

[00:08:45]>> You've you've got loads more money one day than you had the day before because of some investing that you were doing perhaps and um when that happens the government says, "Oh, we're going to have some of that."

[00:09:00]And you have to you have [laughter] to give them some.

[00:09:06]Yeah, right.

[00:09:07]>> [laughter] >> When you uh put your money into different companies or or or houses or anything like that, when you are successful and you make more money, which is a good thing, you can pay or you should pay capital gains tax, which is a way of sharing your success with the country. So, it's a tax. It's a way of helping to pay for the things that you need every day um like, you know, public services like ambulances, fire engines, things like that. So, you're sharing your success with the country.

[00:09:43]And in turn, they look after you with a range of services.

[00:09:51]>> Not a bad effort from everyone today.

[00:09:53]And who knows how knowledgeable these guys would have been if they'd have had GoHenry as a kid, who are our sponsor for this video. For more info and to sign up today, click the links here or in the description below. Thanks for watching, and we'll see you next time.