Written by Michelle Stevens, Banking specialist at finder.com, a personal finance comparison site
Pocket money is turning digital, with 61% of 10-15 year olds now managing their money through a banking or pocket money app, according to a new Finder survey. Could this herald the death of the piggy bank?
Digital services are playing a growing role in the way Brits manage and spend their money, and this is as much true for children as it is for adults. There’s been an explosion of activity in kids’ finance in the past few years, and kids’ debit cards and internet banking now resemble their adult counterparts. Challenger banks have disrupted the sector, and “pocket money apps” that come with a prepaid debit card and parental controls are making waves.
These apps – the likes of gohenry, nimbl and RoosterMoney – have brought a new dimension to children’s money services. Parents can top up their child’s account with pocket money or set chores for them to earn it. Kids get their own linked account in the app – many viewing it on their own smartphone – where they can check their balance, choose to save their money or monitor their spending, while parents can actively control their child’s debit card use, by setting limits on spending amounts or where the card can be used. A further benefit is that children can learn about managing money, saving and budgeting from as young as 6, forming good financial habits for later in life. But unlike kids’ bank accounts, these apps aren’t free – typically costing a couple of pounds a month.
Most kids (72%) in our survey had received money advice from their parents, highlighting the value of parents being money savvy themselves and passing this knowledge on to their children. But only 22% of the children we asked had been taught about managing money at school, reflecting a potential gap in financial education. Indeed, a cross-party group of MPs has advocated that all children in the UK should be taught basic money skills in primary school by 2030. And there is appetite to learn – 64% of the kids we polled wanted to learn about managing money from their app provider, although only 14% do so currently. This presents a big opportunity both for banks and pocket money apps to provide resources on good money management and the features to implement it.
As Louise Hill, co-founder of gohenry, told Finder for our recent report on this topic: “We need to all work together (schools, government, parents and industry) to equip children with the money management skills they need to navigate the adult world of finance…to ensure that when the next generation hits adulthood they don’t sink amongst access to fast credit and plenty of temptations.”
The burgeoning availability of digital services is not to say that receiving cash in a birthday card or saving up coins in a piggy bank doesn’t have a place – indeed, some parents may feel that adding up (and parting with) physical money could be just as beneficial for their kids’ money skills, rather than paying with a card and having all their spending calculated for them in an app.
Cash isn’t dead quite yet. But as many parts of the economy become increasingly digitised, it’s important that children learn how to engage with money in a way that prepares them for financial lives that will also be more digitised than ever before. And with 64% of kids indicating an appetite to learn this from their banking or pocket money app, it’s vital that the providers of kids’ financial services keep pace with the needs of this generation.
Michelle Stevens is the deputy editor at Finder, specialising in banking, finance and mortgages. She has a journalism degree from the University of Sheffield and has been a journalist for more than 10 years, writing on topics including fintech, payment systems and retail.