Parents, help your children develop good money habits early with these fintech tools

Fintech companies are racing to fill a void in tools and education geared toward helping children and teens develop good money habits. Only 17 states require personal finance courses for graduation from high school. According to a 2021 report on Crunchbase, investors poured over $500 million into 89 fintech products specifically serving youth and their parents. That is good news for parents on the hunt for resources. However, selecting the right tool for your child can present a challenge.

Denise Lopez-Gill, the mother of a 16-year-old in the Chicago area, has been sending her son on field trips with cash for years. After a recent school-sponsored field trip to the United Center, she found out her son had trouble buying lunch. “He couldn’t order food for himself and he had to ask someone to pay for it because the places only accepted debit cards,” she told ZDNet via Facebook Messenger.

Jumping into research mode, Lopez-Gill began talking with other parents, seeking tips from school administrators, and scouring the internet for teen-friendly digital banking solutions. She and her husband were pleased to find apps with features that tied chores to financial skills, and they are set on using fintech tools to help their son develop good money habits. “We are going to stick with it for his senior year so we can help him learn to track his spending, see his spending habits, and be able to show him how to use apps efficiently.”

How soon should children start learning financial concepts?

Children who learn good money habits early are better prepared for life. According to the Council for Economic Education (CEE), 93% of students who have been exposed to courses covering personal finance topics like budgeting, savings, and investing save more versus 84% of students who have not been exposed to similar topics. Chris Caltabiano, executive director of CEE, encourages parents to begin working on age-appropriate money lessons early. “If you think of personal finance through the lens of how to make informed decisions, young children understand the idea of choice. The basic notions of how to make decisions [can begin] from a very young age,” he told ZDNet in an interview.

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Research consistently upholds the idea that the sooner children start learning to manage money, the better off they are as adults. Brigham Young University professor of family life Dr. Amy LeBaron-Black noted that children can begin learning about money concepts as toddlers. For example, rewarding youngsters with small monetary rewards for assisting mom or dad is a simple yet effective lesson tying work to financial gain. “Even as a toddler, they can still start becoming comfortable and confident with money,” Dr. LeBaron-Black told ZDNet.  

Let’s say you didn’t start discussing dollars and cents before they were out of Pull-Ups. All is not lost. “The earlier you start the better, but it’s never too late to start. The goal is when kids turn 18, they have the financial habits in place to be a success in financial adulthood,” she added.

“Experiential learning builds financial self-efficacy by giving kids a chance to make and manage their own money. Financial behaviors, as well as self-efficacy, are important for financial well-being.” Dr. LeBaron-Black’s latest research supports this by identifying a link between early financial lessons and improved romantic relationships for adults between the ages of 18 and 30.

Opening accounts at traditional financial institutions for children — especially those younger than 13 — isn’t always a straightforward process. Accounts for minors are typically organized as custodial accounts in the name of the guardian, with limited options for debit card access in the child’s name. ZDNet investigated several options and categorized helpful tools as either fee-free or full-featured solutions.   

Fee-free fintech options for minors

Parents interested in accounts with no fees and who are willing to take a more hands-on approach to guiding a child’s financial education may find these youth accounts ideal. They model traditional bank services for children while giving parents oversight to help manage and approve financial transactions. 

Candace Coleman has three children: ages 14, 9, and 6. She’s been using a full-featured fintech product for several months, but is not satisfied. “I feel like I’m just giving money away. I just have to find something that I can monitor,” she told ZDNet. Parents like Coleman can consider the following options.

Chase offers two types of youth accounts. Chase First Bank accounts can be opened for children ages 6 to 17. The Chase High School Checking accounts are for ages 13 to 17. A Chase First Banking account requires that parents have an existing account with Chase.

Both accounts offer debit card access in the child’s name. However, each account differs in features provided. For example, Chase First Banking offers parental spending controls, allowance controls, and savings goals. High School Checking doesn’t provide either of those features but does offer mobile check deposits, direct deposit, and Zelle transfers.

Highlights:

• No monthly fee or minimum balance required.
• Debit cards are issued in the child’s name.
• Chase First Banking offers chore list, allowance, and savings subaccounts.
• Chase First Banking provides parental spending controls, specifies amounts and spending categories, track spending, and purchase approval.
• High School checking provides direct deposit, mobile banking options, and Zelle transfers.

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Full-featured, education plus fintech solutions

Parents looking for more granular control features, in-app financial guidance, or tools that influence positive behavior adjustment can choose fintech options that wrap a broader experience around the basic banking functionality. The biggest difference with the following options is the recurring subscription fee. The convenience of automating financial growth strategies or robust technology that helps you monitor your child’s financial dealings comes with an acceptable price for millions of families.

Lopez-Gill has no problem paying Greenlight’s monthly fee for her son’s account. “It is very easy for me to maneuver. I’m hoping the chores list helps, since he gets complacent finishing them all. This will be a way to remind him he has not finished. I think this will be a helpful financial app for all of us,” she shared.

Launched in 2013, FamZoo’s stated mission focuses on financial literacy for youth. FamZoo’s founder, Bill Dwight, developed the app after recognizing that his five children needed a tool to help them build smart money habits. “We are 100% focused on financial education. It’s really a mission-driven company,” he told ZDNet. The features provided mimic real-world financial scenarios to give children hands-on experience with complex concepts.

The parent-paid compound interest feature allows parents to reward behaviors such as saving and giving with customizable interest rates. “It’s very similar to real interest but more interesting. I can raise the rates as a parent until the child notices and hopefully gets into the habit of splitting between spending, saving, and giving early on,” Dwight added.

Highlights:

• $5.99 monthly subscription fee per family includes unlimited number of accounts.
• Provides subaccounts for savings, investing, and giving goals.
• Children can manage budgets, check chore list, and request special purchase approval.
• Parent can offer reward and levy fines.
• Parents can set spending controls per spending category.

Goalsetter launched in 2016 with financial literacy for children a central component of the app. Tanya Van Court, the founder and CEO, related to the urgent need for financial literacy after losing 80% of a million dollar stock portfolio overnight in the dot-com bubble of 2001. “I graduated from Stanford with two degrees in engineering, but every educational institution I had attended failed to teach me about personal finances,” Van Court told ZDNet. She decided to make financial education a priority with her children. 

Her daughter asked for a bike and enough money for an investment account on her ninth birthday. “I thought to myself, if I can get every child like you to say that, I can change the world,” Van Court said, recalling the inspiration to develop Goalsetter.

With an investment seed of $3.9 million, Goalsetter combines pop culture with financial education to relate complex concepts in a language young people understand. The “learn before you burn” features requires users take weekly quizzes to maintain uninterrupted access to debit card functionality. A CredLit score (modeled after the FICO credit score) provides parents with a quantifiable guide of their child’s financial education progression. 

Highlights:

• Monthly subscriptions range from $3.95 to $5.95.
• Pairs with a Cashola debit card backed by Mastercard.
• GoalCards, digital gift cards, can be divided among spending, saving, giving, and investment subaccounts.
• Spending controls combine with weekly literacy quizzes that promote consistent growth.
• Investment accounts allow users to research stocks and purchase ETF within the app .

Article source: https://www.zdnet.com/finance/banking/parents-fintech-tools-can-help-children-develop-good-money-habits-early/#ftag=RSSbaffb68