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.