Greenlight Financial Steps Up to Tackle the Financial Literacy Crisis

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America is in the grip of a crisis - a crisis which is seeing young people worry more than any previous generation about their prospects to enjoy elements of life which their parents and grandparents considered standard.

We are talking of course about the financial literacy crisis, which is especially prevalent among young people. This problem has been allowed to fester and grow and has gone largely unchallenged by both the general public and those responsible for shaping policy. Financial awareness isn't taught in most homes or schools. Hardly a day goes by when you don't hear someone lamenting why niche topics like trigonometry are taught, but there are no classes on how to fill out a tax return or understand interest rates.

Before we get into what can be done to address the financial literacy crisis however, it would pay to acquire a deeper understanding of the numbers behind it.

Financial Literacy

One of the most worrying statistics coming out of the financial literacy crisis is that a mere 16 percent of Americans between the ages of 18 and 26 are optimistic about their financial future.

"Financial literacy statistics have made it abundantly clear that an epidemic of illiteracy is pervasive among the world," reports the Financial Educators Council. "Financial literacy statistics demonstrate that most individuals do not possess the financial expertise needed to make healthy financial choices that will benefit them in the long run. These facts send a clear message to those in charge of public policy and those with the desire to better their communities - the financial illiteracy epidemic must be addressed."

One of the most pressing concerns facing millennials and younger generations comes down to the chances they feel they have of ever owning property. That which was once considered a simple goal for any young couple or family now seems very much out of reach to many. Booming house prices, unattainable deposit requirements, and more are dooming many young people to forever shovel their money into the black hole of rent. Some are fortunate to have parents who are well off enough to give them a deposit or support them while they save up, but these are the exception rather than the rule.

Further and higher education are also a concern for young people. 54 percent of millennials have expressed worry that they will never be able to pay back their student loan debt. This is causing many young people to forgo higher education due to financial concerns, which in turn could cause a talent crisis in graduate jobs in the future - further exacerbating the problem.

When young adults were asked what high school course they felt would have benefited their lives the most, 51.4 percent responded with "money management".

Greenlight Financial

One banking brand which is taking the financial literacy crisis seriously is Greenlight Financial. The Atlanta-based fintech brand has recently announced a new kind of debit card, designed to help children learn to manage their money better from a young age.

"We're thrilled to partner with our Series B investors to bring Greenlight to millions of new families and help parents prepare their children for healthy financial futures," said Greenlight Cofounder and CEO, Timothy Sheehan. "In the near future, I hope that this generation of kids grows up to spend wisely, learn the importance of saving and feel confident investing to build wealth over the long-term."

When children aged 13 and up open an account with their parents, they are issued a debit card and a companion smartphone app. Available on both Android and iOS, the mobile app allows both parent and child to monitor their spending, set savings goals, request cash, and get notification alerts when money is put in their account.

There is absolutely no overdraft or credit facility, so they can't spend money they don't have, and admins (i.e. parents) can set restrictions on the kinds of places where the card can be used - stores, restaurants, online, etc. - making sure spending is restricted to previously agreed-upon categories. Parents can switch off the card whenever they wish and can set regular or one-off payments into the account for allowance or special rewards. They can also use ATM access controls to specify withdrawal limits, and the card automatically blocks certain activities like wire transfers, money orders, lotteries, and cashback from purchases.

"At Wells Fargo, financial literacy and helping our clients succeed is a part of our core values," said Head of Strategic Partnership Investing at Wells Fargo, Thomas Richardson. "Greenlight offers parents an opportunity to build that core competency of financial literacy in their child's formative years, through its innovative, interactive and fully digitized product offering. We are impressed by Greenlight's rapid growth, and we are excited to help fuel the next phase of its development."

Final Thoughts

Thanks to innovative brands like Greenlight Financial, it looks like new generations may grow up with a level of financial literacy which has sadly not been addressed for millennials and generation Z.

Financial literacy is sure to be a hot topic at Future Digital Finance 2020, taking place in March at the Hyatt Regency Miami, FL.

Download the agenda for more information and insights.