Financial Ed 101 for the wallet-less generation
Online banking began over thirty years ago, and mobile banking took off more than ten years ago–which means that there are at least one if not two generations that haven’t experienced the old fashioned passbook savings account, nor have they learned financial responsibility through literally and figuratively balancing their checkbooks. Going paperless, wallet-less, and even branchless means that many individuals have never had financial discussions or relationships with financial advisors or bankers. And for those millennials and Gen Xers who may have, it may only have been to open an account, deposit a check or use an ATM. According to Cognizant’s latest whitepaper despite faster mobile and digital access to information, especially banking and financial, more than ever “people’s relationship with money is broken.”
As mobile payments and fintech banking have begun to supplant real wallets and face-to-face experiences, the personal financial relationships that were often forged by opening savings accounts and applying for car loans, home mortgages, and business loans no longer exist. All of those transactions can be done online now and with very little human interaction. The traditional first step to personal financial literacy has been lost. The Answer? According to financial professional Vanessa Lindley of Lindley Consulting Group LLC, “Simplicity is the key.” Lindley recommends that anyone not yet comfortable with interpreting their financials should use a “personal financial management platform.” An online database with everything in one place, such as Mint or Visa’s “Practical Money Skills” simplifies the learning process and makes it more likely that you’ll be able to more easily understand how your finances do and should work, which may not always be the same.
Lindley works to build her clients’ financial literacy by focusing on two main areas. By first creating a budget you learn how to allocate spending and understand how much money goes to what expense category, and additionally how long it lasts. Secondly, by learning to recognize spending habits. Lindley notes that “people are dislocated from their money. Swiping and being cashless tends to disconnect people from their money, and people actually need to spend time with their money to learn better spending, savings, and budgeting habits.” And learning doesn’t have to be boring. Wells Fargo’s app Daily Change uses the love of games to entice users to scrimp and save. Qapital helps people automate savings, change spending habits, create budgets and set goals for things like adventures and guilty pleasures. StashInvest lets users start investing with as little as $5, Budget Boss helps users create budgets on their mobile phones and Level Money “replaces your bank balance with a spendable number for the month.“ Credit Karma offers not only free credit scores but tips on how to improve scores and get the best offers on credit cards, loans and refinancing. Clarity Money, an app that gained over 10,000 users less than two days after its launch, can suggest ways to lower debt, cancel unused and unneeded subscriptions and analyzes your finances. N26, a mobile bank, claims to be able to run your entire life from your phone if you can open your account within a guaranteed 8 minutes or less.
Apps now do what we used to be taught: banking, budgeting, saving and allocation of funds and resources – also known as postponing gratification. The explosion of apps and platforms means that we can get faster and more efficient ways to bank, spend or save money, but they are still not always a replacement for financial education and understanding of how money works and how we need to make our money work for us. Despite everything to the contrary, Bank Innovation notes that “Consumers want more financial advice from banks.” There’s still no way to get around the importance of learning firsthand the skills that have direct impact on our financial well-being and success.