Children have always been looked at as unimportant customers who commit to a bank at a young age but never really deal with money or understand it until they are older, with big banks not fully catering to children as valuable customers. More needs to be done to induct the digital generation into the financial world. Parents need to involve their children into conversations around money from an early age and draw on creative methods to make budgeting more than just a chore.
When it came to what was most important to children during Covid-19, two-thirds (66%) agreed that money was important, with it being most important to 13-16-year-olds (75%). This made it one of the top three issues that mattered the most to children in 2020/21. Mark Brant is the CEO of nimbl, the pre-paid Mastercard contactless debit card and mobile app developed for 6–18-year-olds. With over 10 years experience in the payments sector, Brant had this to say about ways to sharpen children’s money management skills:
The reopening of non-essential shops marks a major milestone for both retailers and the wider public desperate to return to some form of normality. Despite the economic uncertainty of the past year, the Office for Budget Responsibility estimates that UK households have built up an extra £180billion in savings during the pandemic. The nation’s children are in a similar position, with nimbl research showing that in March this year kids’ savings saw a 15% increase compared to the same time last year.
The ongoing relaxation of restrictions looks set to kickstart the spending of some of these lockdown savings, and parents may be concerned about how wise or frivolous their children will be when they are let loose in their favourite stores.
Can children be trusted with money?
Teaching kids to be responsible with money is a challenge that parents have long grappled with. Until relatively recently, kids typically went from saving in piggy banks to signing up to a bank account, with little support in that transition. If we want young adults to be confident and knowledgeable about managing their money, it makes sense to let them practice and develop these skills in a safe environment as children first.
Smart pocket money apps offer a safe and reliable route into the world of money for children as young as six, with a range of security features that go above and beyond what is available with a traditional bank card. Parents get peace of mind while children learn the ropes of money management.
The tech underpinning children’s pocket money cards offers additional security beyond standard bank accounts. For instance, while some high street banks do give the option to lock and unlock cards, this is often not available to the parents of the card user. In contrast, nimbl cards offer parents the ability to ‘soft lock’ the card, rather than having to cancel it altogether, which can prove really useful for any cards temporarily misplaced by children.
Smart apps also have the ability to grow alongside the child. For instance, with nimbl’s bespoke spending controls, parents can decide where and when their children’s cards can be used, with limits on cash machines, online and in-store spending. In case of emergencies (or for the odd treat), the app also makes it easy for parents to provide instant top-ups.
Parents have a range of security and safety features at their fingertips so they can loosen or tighten the apron strings as they see fit. The ability to toggle spending controls on or off with just a few clicks on the app is far simpler than a long phone conversation with your bank!
Starting good money habits early
Banks do not usually offer children an account until the age of 11, but research shows that money habits are often instilled as early as age 7. Most children are curious about money and may be more financially aware than adults realise: according to a recent BBC Newsround survey into the impact of the pandemic on children, money is one of the top three issues on the minds of the nation’s children.
There is an opportunity to use this interest to help cement good financial habits. For example, a ‘micro-saving’ function, such as the one found on the nimbl app, can help regular saving become second nature; every time children spend using their card, an amount chosen by them is transferred automatically into their savings account, building a pot of funds steadily and effortlessly.
Navigating a cashless world
With the pandemic arguably accelerating the shift towards a cashless society, it has never been more important to teach children about money, particularly when it comes to online spending. The potential pitfalls of overspending and online fraud can understandably be worrying for parents. Although the Government is under increasing pressure to improve safeguards for children against financial harms within the upcoming Online Safety Bill, it is worth harnessing the technology that is already available to help minimise risks.
When it comes to teaching children how to spend wisely and to appreciate the benefits of saving, fintech really can be a force for good. If we want a society where more adults make better decisions about their money, surely it’s worth investing early in children’s education.