It's Monday morning, the first day of February half-term, but a group of children are sitting cross-legged in a circle on the floor at a north London school. "What is it called when a government gives money to the banks when they're in trouble? It starts with 'b'," says the teacher. "Begging?" asks seven-year-old Beth.

"Do you know what finance means?" whispers Beth to her best friend Aanya. Aanya shakes her head. "It means money," explains Beth, while rubbing her fingers together to gesture cash in her hands. "Money, money, money," she whispers before collapsing in giggles.

Beth and Aanya are the youngest of a group of 11 children, aged between seven and 14, who spent their half-term on the "fun with finance" course.

It is run by the Cool Head Company, a group of three women - two former bankers and a primary school teacher - who aim to make understanding money easy and relevant to children.

But this week-long programme isn't as simple as learning how to save your pocket money; instead, it covers subjects such as assets and liabilities and stocks and shares through simple, fun activities - and most of the children seem slightly over-excited about it.

"We're going to be rich!" shouts Nicholas, who wants to take a loan to buy a Nintendo DS and PlayStation 3.

"Gordie Brown's got all our money!" adds 11-year-old Nikhil.

We start with the basics by playing the economy game - which involves throwing balls into a bucket to demonstrate how money moves between the government, businesses, banks and tax-paying consumers. It's chaotic but constructive playground fun as money balls shoot from box to box.

David and Sophie are in charge of the business money balls. "Don't throw them to the consumer box, we don't have to pay them big salaries in a credit crunch," he mumbles in Sophie's ear.

Meanwhile, the government team is about to throw a load of money balls in the banks' direction and bail them out.

The Cool Head Company tailors its courses to suit the ages and needs of different age groups - during half-term holidays fun with finance combines play activities with learning, while in term-time it offers customised sessions on the credit crunch and budgeting for schools.

Kate Kuper, one of the Cool Head directors who used to work for the World Bank, believes it is crucial that all children learn about the relevance of money at a young age.

"Children are very aware of the news and they're being exposed to conversations about the credit crunch. When I told my eight-year-old stepdaughter we weren't going on holiday, she said, 'Oh, is it because of the credit crunch?' It's surprising how much they already know, and it gets them asking more questions about how the economy works and what their role is in it."

Primary school teacher and fellow Cool Head director Kelly Heymans agrees: "It needs to be instilled in children that money is important and it is interesting to learn about."

One of the most popular activities is Witches' Den, Cool Head's version of entrepreneur programme Dragons' Den. The children work in groups to come up with their own business ideas, film an advert, and present it to the Witches' Den board. "The younger ones come up with cute companies like hot chocolate and ice-cream shops," says Kuper.

"A group of boys had an idea for velcro wallpaper so they could throw their clothes on the wall rather than leave them on the floor and get told off. It's a fun game and they really enjoy it, but it also gets them thinking about whether a product is marketable, and whether it will make them a profit."

Later in the day, we watch a cartoon about a caveman called Ump who set up the world's first business selling clubs (Ump bought his wife a bigger cave with the profits they made) - his business grows as other cavemen buy shares.

"Who knows what a stockmarket is?" asks Kuper. Beth thinks she does. "There's a market near me where they sell burgers and clothes, is it like that?" Amber, 12, gets it right. "It's where you buy shares. A share is part of a company. If they make a profit, you make a profit."

Heymans says: "We took them on a day trip, and on the way, one boy stopped to buy a copy of the paper and check his shares. It just goes to show how much children do want to learn."

The course also includes a treasure hunt in the Bank of England museum, the chance to hold a gold bar, careers talks, design-your-own-currency games and strategy activities where the children pretend to be managing directors on a board.

Sarita, who at 14 is the eldest on the course, is busy tracking Cadbury's share price. "This isn't my ideal half-term, but it's not bad. We need to know about money stuff for when we get older and it's better to learn it now than to get into trouble over money later."

• The fun with finance course costs £50 a day, with discounts when booking for three or more days. For more information go to coolheadcompany.co.uk