New research published by nimbl, the prepaid debit card for ages 6-18, has found that despite the ongoing economic disruption, pocket money has increased by 16% during lockdown, rising to £17.88.
Based on an analysis of the financial activity of more than 11,000 children, nimbl also found that children’s savings have grown by 144% over lockdown whilst, in worrying news for retailers, spending has dropped dramatically.
In what might be a worrying sign for retailers, net card transactions – which accounts for the modest increase in online shopping – have more than halved during lockdown. Savings, meanwhile, have more than doubled during lockdown, increasing by 144%, offering reassurance to parents that children have started to develop strong financial literacy habits.
Mark Brant, CEO of nimbl, said: “It would certainly seem that children have earned their keep during lockdown. What will be particularly reassuring to parents up and down the country is that the first impulse of children on receiving extra pocket money is to bank the difference, rather than spend the lot.
“The economy depends on raising a generation of financially confident and competent adults. Study after study suggests that financial habits are learned at a young age, so nimbl’s research is an encouraging sign we’re charting the right course. As we begin to emerge from lockdown, we do need to take care, as parents, to ensure that the brilliant lessons children have clearly learned over the past few months don’t disappear as shops re-open their doors.”
The youth market is certainly a fintech ecosystem that is flouring right now. New investment app Beanstalk launched last month, focused on disrupting child savings, hoping to revolutionise the way families put money aside for their children’s future. Beanstalk transforms saving for children, allowing all members of a family to work together to invest for their future, whatever its size, shape or budget. The company’s user-friendly mobile app allows parents to open and manage Junior ISA accounts for all their children from a single app in just 2 minutes with only £5 – removing the barriers of traditional alternatives which often require visits to a physical bank branch with separate paperwork for each child and/or minimum contributions.
Amongst many unique features, Beanstalk allows parents to invite grandparents and other friends and family members to link to the children’s accounts and send/receive gift messages. When linked, family and friends can use their own apps to contribute in a way that best suits their own circumstances, including ad hoc top-ups, round ups on everyday spending, money back on shopping through a unique integration with KidStart and regular contributions. Beanstalk offers stocks & shares ISAs and Junior ISAs, so any returns are tax-free and require no minimum or regular contributions, combined with a 0.5% fee – one of the lowest on the market – meaning more is saved for you, your kids and their future.
The app removes the complexity of choosing how savings are invested, by providing a simple choice of the percentage split between a global shares fund and a cash fund in whatever split parents want and which can be changed at any time using a simple slider interface.
Beanstalk was co-founded by financial services’ veterans Julian Robson and Cem Eyi. Julian brings with him extensive banking experience combined with an understanding of family finance. Julian joined Capital One on its start in the UK, leading the launch and development of a number of businesses for the Company. He left as head of Continental Europe in 2005, to, amongst other things, co-found KidStart, the unique free shopping club for parents that gives you money for your kids whenever you shop. Cem Eyi is COO at KidStart, having joined the company from Capital One in 2007 and also brings extensive financial services experience in the UK.
“While the fintech revolution has dramatically changed the landscape for much of financial services, it has passed the child savings and investment market by,” said Julian Robson, CEO and co-founder of Beanstalk. “However, with the costs facing today’s children as they enter adulthood, there has never been a more critical time for this to make it easier for parents to put money aside for their children. We have launched Beanstalk to solve this issue, providing a universal and accessible child savings account, that tears down the barriers to saving for our children’s futures.”
Another fan of early education is Louise Hill, the COO and Co-Founder of gohenry. This pocket money card is a smart solution for managing your child’s money and giving money to children, through an allowance prepaid card.
“Access to apps like gohenry from a young age enables kids to learn by doing and encourages them to really think about their spending decisions, which is more important than ever as people use the tangible resource of cash less and less. Our customers tell us that there aren’t the practical resources out there to empower children with these digital life skills – schools simply aren’t able to provide the hands-on experience that financial apps can.
“I am a firm believer that learning by doing is the best way to teach life skills such as money management. You can’t just teach the theory of swimming, you need to get into the water and do it for yourself. It’s the same with money management. But, financial education isn’t as exciting to a child as swimming, so you need to find a way to make them want to get in the pool – to continue my analogy. This is where we come in.”
“Since gohenry started in 2012, children across the UK have earned more than £1m from tidying their bedrooms alone. This shows how children as young as six can learn the fundamentals of working to earn money, from the simplest of chores – a valuable early life lesson in the value of money.”
While research from gohenry shows that kids are actually spending less during lockdown, their ability to earn cash is rising with more parents at home with their children than ever before. Louise explains,
“Unsurprisingly, we have noticed a sharp fall in global shop and ATM transactions accompanied by an increase in online transactions since social restrictions came into place – online spending by our UK customers jumped by 65% in the first two weeks of lockdown. As a service designed to help kids manage money in a cashless society, we are well-positioned to help our young customers move away from cash to digital spend as social distancing accelerates a change in how we all interact with money.
“We have seen that children who are using gohenry are grasping the power of learning particularly since the closure of schools due to Covid-19, using the app’s reward tools to build their savings. With fewer rewards up for grabs for getting ready for school or completing homework, parents are instead keeping their kids busy and getting help around the house with children earning more for gardening (up 493%), washing the car (up 198%) and washing the dishes (up 68%) during lockdown.”
Meanwhile, tickr, an app built for the next generation of investors to make money whilst having a positive effect on the planet, has launched the world’s first Junior Impact Stocks and Shares ISA (JISA).
Parents can now invest in their children’s future – tax free – and help prepare them for adult life whilst contributing towards building a better world by the time they get the money.
Research shows that young people face four major financial challenges as they reach adulthood: paying their rent, servicing their student debt, saving for a deposit on a property, and simply managing their day-to-day financial essentials. Investing just a small amount each month when they’re young can develop into some serious cash for when the children grow up.
Tom McGillycuddy, co-founder of tickr, said: “Making sure a child is prepared for adult life as they grow is a challenge many parents face. Having money tucked safely away in an investment account growing as their children do, can give parents one less thing to worry about. Building savings for your children can be a lot easier than you think; just a small amount deposited every month can make a big difference over the long-term. We’re offering JISAs to help out a little, and give children the financial freedom they need to thrive in adult life.”
Still, what do the experts think of it all? Sterling Trading Tech (STT), a leader in compliance, risk and infrastructure solutions for equity, options and futures trading, announced during the pandemic that it was committing resources to support Wall Street Bound Inc., a non-profit urban youth financial education, training and mentoring organization.
For Jim Nevotti, President of Sterling Trading Tech, said: “Sterling Trading Tech knows that education is an essential component of professional trading, which is why we dedicated the time and resources toward building the industry’s most realistic trading simulation technology. It’s vital that traders learn on professional software in a real-time and risk-free environment. The opportunity for trading educators to incorporate our trading simulation technology into their programs is really exciting to us.”
Troy Prince, CEO of Wall Street Bound, believes that a financial education can begin at any age, he added: “We as parents and educators must recognize the importance of science, mathematics, finance and importantly, fintech education. Generating an early interest in STEM disciplines will give young people the exposure and skills they will need in order to be excited about learning and prepared for future opportunities in fintech. I think it’s also important that we pay particular attention to improving minority and female representation in finance and fintech. We must be intentional about exposing young minds from those under-represented groups to the finance and fintech industries, vigorously supporting those that have shown interest and ability, while making opportunities widely available. Without effort, it is highly unlikely that the status quo will change.”