What Is a Bank Account?
A bank account is a record of how much money you have with a bank.
Watching the balance change
The number changes every time money comes in or goes out.
📤 Money OUT
- Buying something
- Paying a bill
- Transferring money
- Withdrawing cash
Income is money coming in — but not everything coming into an account is necessarily income. A transfer from another account you own, for example, is simply moving money you already had.
Physical money vs a digital record
With a jar
You can physically see your $20.
With a bank account
You see a digital record showing that you have $20.
The money isn't necessarily sitting there as your exact $20 in notes and coins — it's tracked as a number instead.
Balance
Balance means how much money the account currently shows you have available. In the example above, the balance ended at $25.
Work out the balance
Start: $20. Add $10 pocket money, spend $4 on a toy, spend $3 on a snack, receive $5 as a gift. What's the balance now?
$20 + $10 − $4 − $3 + $5 = $28.
Types of bank accounts
Banks usually offer an everyday (transaction) account for day-to-day spending, and a savings account for money you're setting aside. Different accounts are designed for different purposes.
If you'd like, you can show your child a supervised example using your own banking app — without revealing passwords, account numbers, or other private information. The goal is simply to help them understand what a balance is.
Banks provide statements — a list of past transactions — and show your available balance, which is what you can actually spend right now. Some payments, like bills, can be set up as automatic payments that happen on their own each period.
Where to next
More on banks, income and saving.