From Piggy Bank to Portfolio: Four Steps to Raising Financially Confident Kids
By Rachel O’Connor, Certified Financial Planner®
Recently, a client sent me this email and, with her permission, I’ve shared it because I suspect a lot of parents can relate.
Hi Rachel,
I recently opened a bank account for my 6yr old to put her piggy bank money into at Commonwealth Bank - there was $120, but it was the most underwhelming process for her. I had to do the account online, we had to go back home and return with original birth certificates for her and myself, they didn’t give her anything tangible to take away except the receipt and I left very disappointed. I’m sure she was confused as to why I had made such a big deal ‘about nothing’.
Any other tips to start kids on the right financial journey and associated behaviours more positively, and outlining what is best for parents as well, would be appreciated.
Thanks
Michelle
We grew up counting coins, filling piggy banks and watching our parents hand over cash at the checkout. Money felt real because we could see it.
Our children are growing up in a very different world.
Today they watch us tap a phone, click a button or buy something online without ever seeing money change hands. It’s fast, convenient and part of everyday life, but it also makes teaching children about money a little more challenging.
So how do we help our children understand the value of something they rarely see?
The good news is some of the most valuable money lessons happen in everyday moments.
Why teaching kids about money feels different today
Australia is becoming increasingly cashless. According to the Reserve Bank of Australia’s Consumer Payments Survey, Australians now use cards and digital wallets far more often than cash for everyday purchases. Convenience has changed the way we pay, but it’s also changed the way children experience money.
When your child watches you buy groceries, they don’t see money leaving your wallet. They see you tap your phone, collect the shopping and walk away.
It’s easy to understand why younger children can think money simply appears whenever it’s needed.
Research from the University of Cambridge suggests many of the behaviours that shape our relationship with money, including planning ahead, delaying gratification and self-control, are largely formed by around the age of seven. Importantly, children don’t develop these habits through formal lessons. They learn by watching the adults around them and through the experiences they’re given.
Many of the behaviours that shape our relationship with money are largely formed by around the age of seven.
Building financial confidence in children
Let’s come back to Michelle’s question, about how to help her daughter get started with money.
The good news is you don’t have to teach everything at once, and you certainly don’t begin with investing. Financial confidence is built gradually, and it follows a fairly natural order for every child.
I think of it as four stages that build on one another. First they learn what money is. Then they earn a little of their own. They save some. And in time, they start to grow it. Each stage sets up the next, and every child moves through them at their own pace.
STAGE 1: Learn
Understand where money comes from and how it works.
The best learning often happens through everyday experiences.Before children can value money, they first need to see it, talk about it and understand it’s real.
It starts with talking to kids about money in everyday moments.
“The groceries cost $250 today.”
“We’re choosing this one because it’s better value.”
“We’ve been saving for this holiday, so now we can finally book it.”
Those seemingly ordinary moments help children understand that money isn’t just something we spend. It’s something we earn, manage and use to create opportunities.
Make talking about money normal at home, not something that is taboo. The more naturally children hear you talk about it, the more comfortable they’ll become talking about it themselves.
STAGE 2: Earn
Discover the connection between effort and reward.
Discover the connection between effort and reward.
Money that’s earned is often valued differently to money that’s simply given. This is the stage where children begin to understand the connection between effort, reward and making choices with their own money.
There’s no one-size-fits-all approach to pocket money. Some families provide a regular allowance, while others pay children for taking on additional jobs around the house. Many do a combination of both.
At home, my boys can earn a little extra by helping with additional jobs. Do they always do them perfectly? Definitely not. But that’s not really the point. They’re learning that money comes from effort, and with that comes choices.
Can I afford this?
Should I spend it now or save for something bigger?
How much money do I have left?
Those everyday questions become the building blocks of financial confidence.
A pocket money app that’s worked well for my boys
One tool I’ve personally used with my boys is Spriggy.
It gives them a prepaid card and app where they can see their balance, decide whether to spend or save, and watch their money change as they make purchases.
What I like most isn’t the technology itself. It’s how it makes money visible and creates opportunities for real conversations about spending, saving and making thoughtful financial decisions.
Of course, Spriggy is just one option. Whether you use a children’s money app, a bank account or simply cash, the goal is the same: giving children the opportunity to practise managing money and build financial confidence.
STAGE 3: Save
Learn to plan ahead and delay gratification.
Once children have experienced the satisfaction of earning their own money, the next challenge is learning to hold onto it. This is the stage where they discover that saving isn’t about missing out. It’s about making choices today that help them achieve something they really want tomorrow.
Encourage saving with a goal in mind
Saving becomes much more meaningful when there’s something exciting at the end of it. Whether it’s a new bike, concert tickets or spending money for a family holiday, working towards a goal teaches patience, planning and delayed gratification.
For younger children, a savings jar makes progress visible, while older children may enjoy watching their bank balance gradually grow. Celebrate milestones along the way and remind them that every contribution, no matter how small, brings them one step closer to their goal.
Over time, they’ll begin to see that some of the best things are worth waiting for.
Let them learn from small mistakes
This can be one of the hardest parts of parenting.
When your child wants to spend all their money on something you know they’ll regret, every instinct tells you to step in. But sometimes the most valuable lesson comes from letting them experience the consequences for themselves.
A disappointing $15 purchase today might be the reason they think twice before making a much bigger financial decision later in life. Children don’t develop good judgement because we always make decisions for them. They develop it by making age-appropriate decisions themselves, with our guidance and support along the way.
Our role isn’t to prevent every mistake. It’s to create a safe environment where those mistakes become valuable learning experiences.
Because every spending decision teaches something. Sometimes the lesson is that saving was worth it. Sometimes it’s that spending wasn’t.
Both are valuable.
STAGE 4: Invest
See how patience and time can help money grow.
Once your child has learned about earning, spending and saving, there’s one more stage that brings everything together: investing.
This isn’t about building them a large investment portfolio. It’s about helping them understand one of the most powerful lessons in money.
Money can grow over time.
The greatest advantage children have isn’t money.
It’s time.
Watching an investment rise and fall helps children understand that building wealth is rarely about getting rich quickly. It’s usually about patience, consistency and allowing time to do the heavy lifting.
The amount doesn’t need to be large. Even a small investment can spark conversations about markets, risk, long-term thinking and why successful investing is often about staying the course rather than chasing quick wins.
There are a few ways parents choose to invest for their children
Every family’s circumstances are different, but some of the more common options include:
Micro-investing or share investing platforms, which can be a practical way to help older children see how investing works under a parent’s guidance.
Investing in your own name and gifting the investment later.
Investing on behalf of your child through an investment account.
Investment bonds, which some families use as a long-term savings and investment vehicle.
The right option will depend on your family’s goals, tax position and how you’d like the investment to be managed over time.
Be aware of the tax
Before investing for your child, it’s worth understanding how the investment will be owned and taxed.
The Australian Taxation Office has special tax rules for investment income earned by children. These rules are designed to discourage parents from transferring investment income into their children’s names simply to reduce tax.
For the small amounts, it often won’t be a significant issue, but it’s something worth considering before you get started. A quick conversation with your financial adviser can help you choose a structure that’s right for your family.
It starts with everyday moments
Talking openly about money, giving children opportunities to earn, save and make decisions, and allowing them to learn from small mistakes can have a lasting impact.
And while the world may have changed from coins and cash to cards and digital wallets, the everyday money lessons are just as valuable today as they’ve always been.
At Flourix Wealth, we help women and families build financial confidence. Whether you’re planning for your own future or your children’s, we’re here to help
Here’s to your financial confidence,
Rachel
FAQs
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Research suggests many of the behaviours that shape our relationship with money begin forming in early childhood. Rather than waiting until your child is older, start with simple, age-appropriate conversations about earning, spending and saving. Everyday experiences are often the best teachers.
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There isn’t a right or wrong approach. Some families provide a regular allowance, while others link pocket money to additional jobs around the house. The important thing is giving children opportunities to make decisions, experience the consequences and learn from them.
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For younger children, cash can be a valuable teaching tool because it makes money tangible. As children grow older, digital banking tools and children’s money apps can also help them understand how money works in the digital world they’ll be growing up in.
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Many families choose to invest for their children as part of their long-term financial plan. The most appropriate approach depends on your goals, your family circumstances and the investment structure that’s right for you. Seeking advice before you invest can help you make an informed decision.
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The Australian Taxation Office has special tax rules for investment income earned by children. These rules are designed to discourage parents from transferring investment income into their children’s names simply to reduce tax.
For the small amounts, it often won’t be a significant issue, but it’s something worth considering before you get started. A quick conversation with your financial adviser can help you choose a structure that’s right for your family.
Sources and useful links
University of Cambridge – Habit Formation and Learning in Young Children
Australian Taxation Office – Tax on a Child’s Investment Income
The information in this article is general advice only. It doesn't take into account your personal objectives, financial situation, or needs. Before making any financial decisions, you should consult a qualified financial adviser. Rachel O'Connor and Flourix Wealth Pty Ltd are authorised representatives of GPS Wealth Pty Ltd, AFSL 254544 | ABN 17 005 482 726.
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