As a father to two children I know only too well how difficult it can be to teach kids money skills, let alone in a way that they find interesting and engaging. Schools are not equipped to focus on this life skill; a 2018 Money Advice Service study revealed that teachers in the UK already lack the time and specific qualifications to regularly teach their pupils about money. And, like the life skill of swimming, it’s a skill you can’t just teach the theory of – you need to practice in a real life environment, which is where financial education apps like gohenry come in.
Studies show that children’s financial habits are formed by the age of seven, with most young people forming core behaviours which they will take into adulthood and which will affect financial decisions they make during the rest of their lives. And that has an impact on all of us.
The best way for kids to learn about and grow confident in earning, saving, spending and giving money is by doing all of these things themselves in a controlled environment. Our experience shows that by giving children as young as six more responsibility over their money and equipping them with the tools to use it in the same way they will as adults, young people quickly develop good financial habits. There are of course bumps along the way, but a £20 mistake aged seven is better than a £2,000 one aged 27.
That is something we recognised in 2012 when we created gohenry, a financial education app and prepaid debit card for kids aged 6-18. In doing so, we pioneered a completely new category which is fast becoming more recognised by investors as a horse worth backing.
We have just completed our first ever institutional funding round which raised over $40m and will help us grow our community of over 1.35 million active users in the US and UK. Our community is made up of customers from a wide variety of backgrounds – some tell us they use gohenry as they struggled with financial problems and didn’t want their kids to make the same mistakes. Others have more resource and want their children to understand the value of money and that it has to be earned as well as how it can help others.
Financial education was already extremely important pre-2020, but in a world still reeling from a pandemic and an economy struggling to recover, it has never been more vital to help the next generation make smart financial choices. Not to mention that Gen Z are the world’s first cashless natives. This is a much more sophisticated use of money which wasn’t available to millennials and is completely natural for today’s young people. Our last Youth Economy Report showed that only 14% of 16-18 year olds’ money was being withdrawn at ATMs.
It’s fair to say that parents were caught a little off guard by the proliferation of digital money and how much kids are exposed to it on a daily basis, not just with online shopping but also via other routes – most notably microtransactions in video games like Fortnite, FIFA or Animal Crossing. For example, our data shows that 12 year-old boys spend 46% of their income on video games and gaming services, at an average cost of £184 per year.
Thankfully the pace of innovation in both fintech and e-learning has exploded, providing more and more tools to help kids and families understand and adopt good money skills in the digital age. Accelerated by the pandemic, investments in this sector are outpacing the rise of digital money. Whole new platforms and micro apps for e-learning have been conceived of and launched in just nine months as humanity adapts to this ‘new normal.’ Education, especially Edtech, recorded investments worth $1.1 billion in 2020, its highest-ever annual tally and four times compared to last year.
To see new offerings and investment in this space as well as global news outlets focusing on financial literacy for kids is putting financial education well and truly in the spotlight. In 2021 I think we can expect even more solutions to appear in the fintech space to help parents and educators ensure that Gen Z and Gen Alpha are far more financially savvy than their predecessors.