Bank accounts: 4 lessons your child can learn from opening one

Estimated reading time
 5 min

Learn all about

• Boost your teen’s financial wellbeing with a bank account
• Set SMART goals with your child
• Teach your kids about interest rates

Opening a bank account is one of the many milestones your child gets to experience in life.

Having a bank account opens up a whole new world of spending and saving. It also gives your child plenty of financial responsibility and independence. The best part of having a bank account is the valuable lessons your teenager can learn about money management. It can help to set them up for long-term financial success.

Remember to research the fees and T&Cs to work out what is right for your family.

1. Financial wellbeing and literacy

Teaching your teen the fundamentals of budgeting and saving can help shape their relationship with money.

When you open a bank account for your teen, they’re quickly tossed into a world where financial lingo is the norm. Taking the time to explain what these concepts mean and how they fit together can help improve your teen’s financial literacy and long-term financial wellbeing.

  Hot tip:

Sit down with your child and go through their banking app together. Explain the different features of the app and how they can help your child manage their money and financial wellbeing. For example, the spending categories can help your child understand where they’re spending most of their money and they can use it to build a budget.

2. Setting SMART money goals

A new bank account means more financial freedom for your child which makes this a good opportunity to teach your child how to set SMART money goals. Your child’s goals should be:

• Specific: What does your child want to achieve with their money?
• Measurable: How much will your child need to save or spend to reach their goal?
• Achievable: How will your child achieve your goal?
• Realistic: How much money does your child need to pop into their savings account?
• Timely: When does your child want to reach their goal?

Setting a goal can motivate your child to save more and work towards something that means the world to them.

  Hot tip:

You can use our kid and teen money tracker (PDF) or our savings calculator to set a SMART goal. Print it off and stick it in a spot where they can see it regularly.

3. How interest works

Interest rates can be a tricky concept to understand, especially at a young age. That’s why when you open a bank account, ease your child into learning about what interest rates are and how they can affect their savings.

Understanding how interest rates work can encourage your child to save smarter to earn more interest on their savings.

  Hot tip:

If your child regularly earns interest, acknowledge their hard work. Consider rewarding them with something small, like a sweet treat or matching their savings. This uses the power of incentivisation to keep them motivated.

4. Being responsible with money

When your child has their own bank account, they can see everything to do with their money. How much they’ve saved, spent, and earned in interest – the whole financial picture. They might feel more empowered to make their own financial decisions, such as choosing to save instead of spending and vice versa.

Most banking apps nowadays come with budgeting features, which is a great way to teach your kids about budgeting and splitting their money responsibly.

  Hot tip:

Get your teen involved when you next update your budget. Whether it’s on your banking app or in a spreadsheet, you can lay the foundations of good financial wellbeing and budgeting behaviour. Don’t have a budget? You and your child can team up and use our budget planner to get a detailed budget within minutes. Or you can go old school by downloading our kid-friendly budget tracker (PDF).