When it comes to teaching children about the basics of financial literacy, experience counts. However, many kids these days don’t know the value of money, how to save and spend it, because the things they want often come through parents’ online accounts and actual cash is seldom seen. This causes loads of issues — and often credit card debt — when the child goes to college or moves out. But the Greenlight app and debit card for kids could change that.
Greenlight is an app and a debit card, both of which can be leveraged to train your child to make sound financial decisions and learn basic money principles. Essentially, it’s a parent-controlled digital bank account for kids. Once you open an account for your child, they receive a PIN-enabled debit card, which can be used to make purchases, but cannot be used at ATMs.
Origin of Greenlight
Tim Sheehan is the CEO and co-founder of Greenlight. He tells Parentology that he developed the idea after surveying thousands of parents and monitoring activity in his own home. In short, their kids didn’t know how to handle money, and parents couldn’t rely on financial lessons being taught at school because the curriculum didn’t cover personal finance topics.
“We had to take an active role to ensure they were getting good information, so we could raise financially smart kids,” says Sheehan. “I got super-excited about the idea that kids could grow up and lead financially successful lives because of these important habits.”
And so began his journey developing Greenlight.
To date, there are more than one million people using the card, and over $50 million in savings earned by kids — proof that the tools you use to teach your child about financial literacy must also enable them to think critically about personal wealth and long term goals.
“Not every company is mending those bridges, or has those same goals with regards to social impact,” he says. “We’re finding that by offering a personal finance ‘spectrum’ — integrated with and interrelating spending with saving and investing — they all inform each other.”
Parents can leverage financial technology (known as “fintech”) like Greenlight to teach their children financial literacy by thinking about finance holistically. “Children need to understand that money doesn’t grow on trees. They want savings set aside because things happen in life, and investing is how you achieve wealth,” Sheehan encourages.
The Greenlight app allows children to bolster their bank accounts with a combination of activities: chores, allowance, teaching them how to invest, how wealth grows as a result of parent-paid interest, etc. There are always opportunities to do chores for the sake of contributing to the household, but goal-focused savings is a valuable life lesson.
“Parents have an opportunity to give their children an oversight of how they’re spending, saving and giving back to their community,” says Sheehan. “There’s feedback in real-time to set them on the right path.” Moreover, having a financial goal is an opportunity for parents to speak with their children about money; how to save for, and work towards, something you want.
Even young children can learn basic money concepts before they ever get their first debit card. “Simple things like small allowances teach them that money is how we purchase things and that by saving it they can acquire more over time,” says Sheehan. “As they get older, parents can move onto advanced things like establishing good credit, the concept of interest, and how that will affect [a larger] purchase later on.”
Sheehan’s entire mission is to help parents raise financially smart kids. “Everything we’re accomplishing is to ensure a generation of financially savvy adults,” he says. “We’re letting them practice with money management risk-free,” says Sheehan. “If they have real-time experience and good money habits, then they know how to live within their means and budget for life.”