This is a paid article on behalf of GoHenry
What is Financial Literacy?
Most people know what we mean when we talk about literacy levels. They think about books and reading and if they’ve got kids they probably think ‘phonics’. But what about financial literacy? They would hopefully know that it has something to do with money but may not be able to really define it.
Financial literacy means understanding not just money, but how it works. How to manage income and expenditure. So how to budget, how to save and invest, how to avoid debt. Becoming financially literate is something that starts – or should start – in early childhood.
Why does Financial Literacy Matter?
Nobody needs reminding that we are in a cost-of-living crisis, that energy prices are painfully high and that inflation is getting out of control. But the current financial climate has shown us just how important it is that people not only have enough money in their pockets, but that they know how to manage that money.
Financial skills are seriously lacking, not just in the UK but globally. According to a report from the Centre for Social Justice (CSJ) published in June of this year, half of adults say that they are not confident managing their money day to day. This can have really serious consequences, not just for them and their families, but for the economy. Low financial literacy means low financial resilience – that is the amount of savings that people have to fall back on in an emergency.
Financial Literacy in Childhood
So what is going on? Why aren’t people confident dealing with money? Study after study has shown that the problem is we don’t teach children about money early enough. Ok, so perhaps young children don’t need to know how much their parents earn, how much they have saved, what their mortgage costs. But they can and should be taught the basics – and develop a financial vocabulary – from an early age.
Robert Halfon, MP, wrote in his introduction to the report from the CSJ that, “Research by the Money and Pensions Service shows that children’s money habits that will stick with them for life are formed as early as age seven.” He adds that, “those leaving school without an effective financial education are at high risk of financial abuse, fraud and debt.”
In practical terms, financial literacy means things like being able to work out the correct change from a shopping trip; understanding the difference between simple and compound interest; how to apply percentage discounts; and how investments and pensions work. Some of this is taught in school during maths lessons but clearly not well enough. Children learn best when they can use what they have learned in everyday circumstances. Once they have grasped the basics, it is so much easier for them to grasp the more complicated concepts.
GoHenry
It is a fact that children’s early experience with money is directly related to their ability to grasp the value of money. This then shapes their attitude and behaviour in adult life. Children who are taught good financial management are more likely to save and invest as adults and are therefore less likely to fall into debt.
This is where the award-winning company GoHenry comes in. GoHenry is a prepaid debit card and financial learning App for kids. GoHenry is founded and funded by parents. It is a tool by which parents can help their kids understand money in a fun and practical way. There is a small fee of £2.99 per child, per month which gives kids, teens and parents access to the app and all of its functions, as well as the debit card itself.
GoHenry was started by Louise Hill and Dean Brauer in 2012. It’s named after their very first customer – a boy called Henry. Like many parents, Louise and Dean found that they were paying for their kids online gaming (remember Club Penguin?); extra bits and pieces here and there; and then giving them pocket money. They wanted to support their children’s hobbies as well as prepare them for adult life but realised that their approach wasn’t working. It wasn’t actually teaching them anything about money.
They needed a simple solution. A means by which they could still support their children’s interests whilst also educating them about money – about saving, about want v need and that when it’s gone it’s gone.
Money Management
There’s something really special about watching your kids become independent. Not only does it make them feel good, it empowers them to make their own choices and teaches them to be more confident. GoHenry promotes independence by nurturing healthy financial habits in children. It helps them be smart with spending and saving money but also teaches them about investing and using money to help others.
GoHenry is structured to suit children from 6 to 18. The website has different sections for families and kids and another for teenagers. The cards and app function in much the same way but older kids can enjoy features such as splitting bills with friends when they are out and about.
Companion app and rewards
As well as a debit card (which can also be used via ApplePay), GoHenry is an app. Parents can use the app to add money to their kids’ cards as a one off or as regular pocket money style payment. They can also monitor their spending; motivate them to earn by doing chores; and encourage them to save. There’s a built-in budgeting tool that the children can use to view their balance and see where they have spent and how much they are saving. Parents can also control spending by setting limits, restrict places where their children can use their card and block their cards.
All of this functionality allows kids to earn, save and spend within limits and gives parents peace of min. Other family members can also add money to a child’s GoHenry card so it’s great for Christmases and Birthdays or as a reward for doing well or completing a task.
Lessons can be fun
Learning about money can seem really daunting for anyone – at any age. Perhaps more so for children now, when money is tight for so many families. It’s so important that we demystify money for kids if we want them to understand how it works in real life. GoHenry has developed Money Missions to help combat any fears and to make learning about money fun and rewarding.
Money Missions works like a game. Each time they complete a ‘lesson’ they earn a reward and ‘badges’ when they conquer a skill. There are two levels currently aimed at kids aged 6+ and 12-14 (a level aimed at older children is coming soon).
Each level has information and lessons about things like borrowing and credit, what investing means, how to budget and how to keep your money safe. All subjects everyone needs to know. Skills we should all have. Grasping these topics will give kids a vital foundation for adult life. Financial resilience is so important both for individuals and for the wider economy.
A Full Education
As well as featuring educational financial games, GoHenry has videos on topics such as the cost-of-living crisis, investment trends and current financial affairs. Each are broken down to make them accessible for kids. The more kids know the better they will be able to manage their own affairs when they grow up. This means they are less likely to make poor financial decisions and are less likely to get into debt.
GoHenry is on a mission to create a whole generation of financially responsible adults. Financial literacy levels are only going to improve if we teach our children how to use money safely and responsibly, how to budget and save and how not to get into debt.
A GoHenry card preloaded with a few pounds makes a great birthday or Christmas present. Giving a child their first ever debit card sends them a message that you trust them and that you want them to learn. Not only do they get to feel independent and in control, you are introducing them to habits that will last a lifetime. Habits that might get them on the property ladder one day, help them run their home and affairs responsibly or even enable them to run their own business.
When you know how the world of money works, the world really is your oyster.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
