60% of Parents Opening Accounts Aim to Teach Kids How to Manage a Budget
Parents of credit crunch kids are doing their bit to learn from the mistakes of the past.
Joining the evergreen list of life-lessons taught to children, such as never speak with your mouth full or always look twice when crossing the road, are the ability to manage a budget and avoid falling into debt.
Research by Prepaid International Forum (PIF), the not-for-profit trade body for the prepaid sector, reveals that the dramatic increase in specialist prepaid child accounts is being driven by parents’ desire to ensure children grow up with a strong sense of financial responsibility as well as basic skills such as managing their own budget.
60% of new accounts for children are being opened with this reason in mind according to a recent survey by PIF.*
As a result, PIF says, the number of live accounts and the variety of options on offer are growing dramatically.
goHenry, one of the leading providers and first to market here in the UK, offers a pre-paid debit card and app with unique parental controls and currently has 250,000-plus users. Similarly, another popular brand, Osper reports hitting a peak of 30-plus cards being ordered every minute with at least 20% growth in orders every month since 2014. Nimbl, a recent entrant to the market has also reported a very positive response and higher than predicted sign-up rates.
Alastair Graham, spokesperson for PIF, says:
“Parents are increasingly aware of the pitfalls of financial irresponsibility and excessive debt. Many will have suffered as a result of the recent economic troubles and they don’t want their children to make the same mistakes.
“Equally, with it becoming harder for young people to get on the property ladder and fears of meeting the costs of retirement, it is in parents’ own interests that their children are less of a financial drain as they grow older.
“In response to this demand we’re seeing increased innovation from financial services providers, especially those in the prepaid sector, looking to offer solutions to parents and children alike, meeting modern spending habits as well as the ability to track and analyse spending and budgets.”
Alex Zivoder, CEO of goHenry, adds:
“At goHenry we’ve heard from thousands of parents over the years about how we’ve been able to help their children learn the value of money and how to confidently manage a budget by providing a pre-paid debit card and app with unique parental controls. Pairing pre-paid with apps is definitely a winning formula – the ability for young people to track in real-time exactly how much they have spent and what they have left to spend is a powerful way to encourage sensible money decisions.”
Another industry survey conducted by nimbl, a financial platform for and provider of prepaid cards for 8-18 year olds, revealed parents’ key concern is the shift away from cash in everyday transactions. Two-thirds (66%) of parents surveyed** believed that the increased use of cards and online transactions makes it harder for children to learn about money.
Also, with ‘single click’ virtual payments, parents who may have already been burnt with in-App purchases or unexpected bills resulting from their child’s Xbox or iTunes downloads, feel there is a need for children to appreciate the true cost of easy, ‘invisible’ money transactions.
Clint Wilson CEO and founder, nimbl, believes that parents want reassurance about how their children can manage the financial challenges of a digital world.
“New financial services for children must balance the ease of making online transactions with safeguards, such as budget setting or live reporting so that parents can see how money is being spent.
“Used in the right way, this allows parents to give children a degree of independence along with oversight to ensure budgets are managed and see where money is going.
“Parents can then offer advice and guidance, helping teach skills children will need when they begin work or leave home.”