Teaching kids about money

The truth is, adulthood is rife with financial challenges. The more prepared your children are, the better. From budgeting and saving, to understanding the true value of money, read our guide on teaching your kids financial literacy.

As a parent, you play a vital role in helping your child establish positive habits around money – namely earning, budgeting, saving and spending. Often, this is based on your own personal experience with managing money.

Fortunately, you don’t have to be a financial genius to teach your child good skills. It can be as simple as involving them in very basic purchasing decisions and budgeting from a young age.

The other important point to make is that, as they grow, their financial awareness and needs will change as they progress through primary school and into high school.

We’re committed to giving you the right information and tools to guide your child’s financial journey – and support you along the way.

A great starting point (beyond this article) is to check out ASIC’s Money Smart guide for Teaching Kids About Money, opens in new window.

Understanding where money comes from

With the emergence of cashless transactions, children don’t often see physical cash changing hands in their parents’ day-to-day transactions.

In turn, they might struggle to understand where money actually comes from – that it needs to be earned.

It’s important your kids understand that the plastic card in your purse or wallet is not an endless source of money. Here’s what you can do.

Introduce ‘pocket money’

Doing this early on is a great idea. Whether it’s a ‘cash’ reward for doing chores, or some other task – it’s a fantastic way to help your child understand how money is earned and the tangibility of physical cash.

In other words, it will make it easier for them to establish the link between cash and digital money down the track.

Use cash

You can do this for things like groceries or snacks, just so that your child can see the transfer of physical cash to pay for things.

At the checkout, explain to them that having a job and going to work is how you earn money, for example – in the same way that they earn pocket money for doing chores – which allows you to then buy groceries for the family.

The value of money – needs versus wants

For children earning pocket money, understanding what their money can and can’t buy is an important one. Here, the lesson lies in your child realising the implications of their spending choices.

Kids learn a lot about money through observation, chiefly your spending behaviours, decisions and conversations.

If they see you making impulsive purchases or not considering the price of a particular product, they may struggle with developing their own good spending habits later in life.

It’s up to you to be proactive. When you’re out shopping, try saying things like: ‘I don’t think we really need this’, or ‘The price is a little high, I might see if I can find it cheaper somewhere else’.

In other words, find opportunities to teach them to compare one product to another, as well as the difference between the cost of a particular product and the value of the product.

The workings and benefits of a bank account

Kids love piggy banks. And while using one is a great way to kick things off, managing money wisely requires more sophisticated tools in the real world.

The whole experience of going into a bank with your child and opening an account can have a huge impact. You can talk them through depositing and withdrawing money – and the channels they can use to transact their money.

The same goes for taking them into a branch and depositing their pocket money, transferring it via Internet Banking and NAB app, or getting them to check their account balance.

Next time you pay a bill online or via your smartphone, involve your child and show them how the money gets debited from the balance.

This will help them to understand terms such as like debit, credit, balance, transactions, and ATM. Chances are they’ll find the whole process fascinating.

Budgeting and saving

You should also consider putting your child in charge of their own money early on (with guidance of course). This can be a fantastic way to teach them the importance of budgeting and saving. Let’s break it down.


Say the school holidays are coming up and your child’s friends are planning an outing on one of the days.

You could help them estimate the total cost of the excursion and how much spending money they’ll need on the day. Then, start budgeting for it out of their weekly pocket money in the lead-up to the holidays.


Chat about how a savings account can help your child reach their goals faster – showing them the importance of separating their ‘savings’ from their regular transactions.

They can also name their savings account according to what they’re saving for, and you can help them set up automatic transfers to their savings account so they can put money away regularly.

While your child may find the process frustrating and slow, it’s important that they understand the value of money. It’s a good idea to come up with creative ways for your children to earn some extra cash, instead of ‘topping up’ their account.

Term deposits

You can also teach them the value of not touching their savings and watching it grow over time with a term deposit. They can choose a term which suits their needs and earn interest by locking away their money for that time.

Keep in mind that you need to be 18 to have a term deposit, so if your child is a minor this isn’t an account you can put in their name.

Safety and security

In the digital age, protecting your identity has never been more important. When it comes to banking, it’s critical that you educate your child around the purpose of their PIN and password, and how best to protect them.

In terms of safety and security, there are a number of themes you should sit down and discuss with your child, just to help them get their head around everything. Here are some ideas to get you started:

Keeping your children safe online

Protecting your password

Keeping your mobile devices and apps secure

Protecting your identity online

Identifying spam and phishing messages

Shopping securely online

Protecting your computer from malware

Debit cards versus credit cards

As your child gets older, it’s important they understand the similarities and differences between debit cards and credit cards.

Debit cards

A debit card allows you to access the funds that you have available in your everyday banking transaction account – such as a NAB Classic Banking account. It can be used at ATMs and EFTPOS terminals.

If your debit card is a ‘scheme’ debit card – such as a Visa Debit card or MasterCard Debit card – they can usually be used for online purchases as well as at ATMs around the world.

Credit cards

credit card can also be used at ATMs, EFTPOS terminals and online. But as you know, they don’t draw on money sitting in your everyday bank account.

For your kids, the most important lesson here is that when you’re using a credit card, you’re borrowing money from the bank. This means you can accumulate too much debt if you’re not careful.

They need to understand that you have to pay the money back, as well as any interest and fees – such as annual fees or cash advance fees.

How do I open a bank account for my child?

You can open the following accounts for your child.

Learn more about opening a transaction or savings account for your child.

Ready to apply?

Apply online for one of our savings accounts to help you reach your goals sooner.

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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.

Target Market Determinations for these products are available at nab.com.au/TMD.