Personal finance plays a vital role in managing and planning your financial future, from building credit to growing your nest egg. But not all adults feel that they have a solid understanding of their own personal finances.
In fact, two in five Americans say they are afraid of their finances, according to the 2021 Ria Money Transfer/OnePoll study, while 42% of respondents admitted that they “fake it out” when it comes to personal finances. However, Ma said Nearly half of the respondents believe it is important for them to learn more so that their children are prepared for financial success.
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with A call to teach financial literacy strongerThe question is: who should be responsible for providing it: parents, schools or someone else? About 67% of Americans say it should fall to schools, according to a study by Finder.
The rise of children’s banking as an industry
Today, 23 states have some type of personal finance requirement, while 15 states require that personal finance classes be completed before high school students graduate. Although countries are pushing for more Financial Literacy – Florida and South Carolina are the latest to be mandated – the banking industry can do more.
Many traditional banks offer checking accounts designed for teens. While the fee and balance requirements are low, these accounts often don’t offer a useful way for kids to track or manage their finances.
And so, in 2011, a kid took it upon himself to create a platform for kids to learn the value of money, including budgeting and setting goals to build savings. Bankaroo, founded by 11-year-old Danny Gaffney, is a platform that simulates a bank account before kids were ready to manage a real one.
Danny showed it to parents and schools as a way to help them teach kids about money – although without a real bank account functionality, you can’t keep track of money in real time.
Enter FinTech companies, partnering with banks to drive fees in Children’s Banking Industry. These financial technologies put more financial control in the hands of parents and children through a range of debit cards that come with fun and interactive apps that focus on financial literacy.
How children’s banking products build financial literacy
Better Kids Discount Cards Allow parents to fund their children’s accounts through subsidies or household chores. These accounts work like a digital piggy bank with the ability to collect daily spending, long-term savings, and charitable giving that teaches kids not only how to manage their money but also the benefits of giving back. Parents oversee how their children handle financial decisions before financial independence.
Popular cards like Greenlight and Busykid extend the investment, though there are barriers to parental protection, and FamZoo prepaid card service delves into financial education with interactive features that help teach kids loans and bill payments.
Banks are taking notice, and they are stepping up to compete with more comprehensive checking accounts backed by features for a wider age group. Here too, they are in partnership with fintechs. Chase First Banking, for example, offers wildcard and home business features powered by Greenlight.
How safe are debit cards for children?
Debit cards for kids offer many of the same protections you’ll find in a real bank. Most fintech companies offer FDIC insurance through a partner bank and the ability for parents to lock or freeze their child’s debit card if it is lost or stolen.
Savings and spending buckets also help keep kids’ money safe. Let’s say someone was able to get your child’s card – they only had access to the money in the spending bucket, since that’s the one associated with the debit card. In addition to freezing the card, you can move your child’s money from the spending bucket to savings.
We take privacy seriously Mazoola’s mobile wallet, which chooses to comply with the strict requirements set forth in the Children’s Online Privacy Protection Act that ensures the security of your children’s personal and financial information. It asks for date of birth and gender, not information like a name or Social Security number that is often required for bank accounts.
The future of children’s banking
It’s an exciting time for financial literacy opportunities focused on children and teens. We are likely to see more banks offering interactive checking accounts and learning centers that can better prepare kids to budget their money and avoid debt – either on their own or through partnerships with popular fintech companies.
We may see more robust investment capabilities, with Busykid and Greenlight at the fore, as well as credit building features – an area where mobile banking app currently dominates by accepting Paychecks For teens who have jobs.
Loan, bill sharing and bill payment features also loom, with FamZoo being among the only debit cards that offer these services as part of the app.
And don’t forget the growing popularity of cryptocurrencies: Strive Piggy Bank is synchronizing with crypto wallets, and there are talks about Kidcoin including cryptocurrency functionality soon.