I created virtual bank accounts for my 7- and 9-year-old kids. Here’s how I did that and what we’re learning about money.
Financial Literacy from a Young Age
Financial literacy is one of those life skills that often gets overlooked until adulthood. Many people learn about budgeting, saving, and interest rates through trial and error, sometimes with painful consequences.
I wanted my children to have the opportunity to learn about money and resource management with hands-on experience that allows the chance to make mistakes, too. This is how we truly acquire new skills.
What is Minibank?
Minibank is our family’s personalized banking system. My kids have accounts with me, “The Bank of Dad,”. It’s a simple concept, but it has proven to be a powerful tool for teaching them how money grows, the value of patience, and how financial decisions play out over time.
Practically, I keep their money in two separate pots (with a low AER —which I have chosen to supplement a little). It’s a free tool and it also allows them to have their own debit cards!
However, the more impactful facility is a spreadsheet I keep for them, which they have view-only access to at any moment. We can play with it together when we want to explore. It’s not just theoretical — they can see how interest accumulates and how decisions impact their savings over time.
The Importance of Having an Income
To truly understand financial planning, a consistent income is essential. My children receive £1 weekly as pocket money, supplemented occasionally by gifts from grandparents. Each month, they earn a 0.42% interest rate on their savings, based on 5% yearly AER.
This predictable income allows us to explore various financial scenarios, projecting their account balances towards the year’s end.
We use a visual spreadsheet, as seen below, to experiment with different choices. They decide how much to deposit into their Minibank account versus keeping as cash, observing how these choices, combined with monthly interest, affect their savings. This hands-on approach makes the impact of financial decisions tangible and engaging.
Independence Through Choice
Minibank is not just about numbers. I don’t tell my kids what to do with their money. Instead, I encourage them to explore their choices and the potential outcomes through visualisation tools. Every child approaches this differently, and that’s part of what makes it so valuable.
My older kid enjoys saving money and planning for a major purchase that he can afford. The ability to foresee how much money he will have at the end of the year was something he adored. The thought that he can spend his money appeals to my younger kid. He frequently checks his account and enjoys using his debit card.
They can check their “current account” and take it into consideration when they wish to use their pocket money to purchase something while we’re out.
Key Takeaways
Delayed Gratification: leaving money untouched means it grows faster. The monthly interest deposit has become a small but exciting reward.
Planning and Visualization: We sometimes map out future balances together. Seeing how their savings could grow over months or even years helps them grasp the value of patience.
Compound Interest: Even small savings can grow significantly over time. Earning interest on both deposits and previous interest shows a lot about the magic of compounding.
Confidence in Decision-Making: Without me telling them what to do, they take ownership of their choices. They learn to weigh the satisfaction of spending now against the reward of saving for something bigger.
Reflections
Minibank is becoming more than just a tool for managing finances. My children can experiment, investigate, and develop financial confidence. Every month brings new conversations and new lessons. Perhaps most importantly, we’re learning that financial decisions are rarely black and white — they involve thoughtful consideration and long-term thinking. And while I may be their banker, I’m also learning from them every step of the way. We’re simply enjoying the journey — one interest payment at a time.
