Financial literacy for young ones-II
By: Divjot Singh
Tags: Parenting, Kids, Finance, Education, Kids And Tech

SAWITREE PAMEE / EYEEM VIA GETTY IMAGES

Understanding their pain points further

By the end of the part-I, we concluded with following pain points:

For parents:

Kids should understand value of money

Parents want kids to plan for big spends

Parents want to keep a track on spending

For kids:

How to earn money?

Visibility of liquidity

Spending vs Saving decision

Let’s expand our understanding further to create potential solution space around known pain points.

#1 When parents say that they want their kids to understand the ‘value’ of money, it mostly means that kids:

stay happy, more or less, within pocket money limits — kids living happily within pocket money limits with occasional discussions /negotiations

— kids living happily within pocket money limits with occasional discussions /negotiations become inquisitive and ask tough questions about money — imagine your kid of 10 years asking for an annual raise in monthly pocket money because of inflation or asking for additional interest money because he lent you money 6 months back. Parents would love seeing their kids trying to learn about money

— imagine your kid of 10 years asking for an annual raise in monthly pocket money because of inflation or asking for additional interest money because he lent you money 6 months back. Parents would love seeing their kids trying to learn about money become living embodiment of marshmallow test (:D)

Some parents are open to have theoretical concepts such as interest, savings, inflation etc in a practical approach. For example, one way could be if we ask kids to pay rent for their boarding and food. The kids can earn money via daily chores, keeping their rooms tidy, helping parents in kitchen or other maintenance etc. Kids can take loans from their parents and repay principal with interest.

#2 If kids understand value of money, the second pain point could also be addressed. However if kids have a better visibility and understanding, kids can have their budgets planned. If parents can teach kids to somehow bake in an upcoming big spend, kids can see how much do they have to either cut in spending or get a spike in one-time lump-sum money. This is one level deeper in making kids understand value of the money. I have kept it separate because it seems like a known and widespread use case. This is a delighter for parents.

#3 Parents also want to keep a tab on where kids are spending their money. Nowadays, if the entire money is transferred and spent digitally, keeping track of nature of spends is easy. This helps parents in identifying either a worrying trend or an over-indexed nature of spend that needs urgent attention. For example, a mother told me in a user interview that when her son started going to ATM to get cash instead of purchasing items via card/wallet, it alarmed her and she went on to discuss potential issues in behavior with her son.

Based on above, a potential solution space for parents:

Educate kids about money — nudge to kids on savings, exposure to ancillary concepts to money such as cashflow, interest etc, ability to see income /expenditure /savings, videos/materials for some theoretical exposure

— nudge to kids on savings, exposure to ancillary concepts to money such as cashflow, interest etc, ability to see income /expenditure /savings, videos/materials for some theoretical exposure Helping kids to plan — ability for parents/kids to add new expenditure, its impact to be shown to kids, a clear action plan for kids on how to reach this goal

— ability for parents/kids to add new expenditure, its impact to be shown to kids, a clear action plan for kids on how to reach this goal Tracking — Ability for parents to track how money is being used, rule based alarms

Kids pain points are then somewhat different because they are honestly being forced to think about money and its necessity. Doting parents (and careless probably) might just give in to demands of their kids and keep their kids away from the need to understand about ‘value’ of money.

From kids perspective, their pain points are relatively easier to understand. The kids:

#1 want to earn money — When their parents say that inflow is either fixed (low income), a natural question that kids ask is how to earn more money! Many parents have different systems around it and this is an exciting problem to solve

#2 want to have visibility of liquidity — Kids love either having money in their hands or in their sight. The visibility of money (either verbal agreement or even on piece of paper) gives kids a sense of confidence about future.

#3 want to be able to decide without information asymmetry — This has not been an explicit pain point for kids. Visibility of liquidity and future (pain point #2) events should help kids make fully informed decisions. But as per parents, kids with better

Based on above, a potential solution space for kids:

Daily chores, rates agreement, and paying kids — Kids should be able to get money from parents via a rate agreement of different chores, a weekly (time bound) review of accounts,

— Kids should be able to get money from parents via a rate agreement of different chores, a weekly (time bound) review of accounts, Visibility of cashflow — Kids should be able to see how cashflow looks for the next 6–8 months, add big spend event, ask for pay raise

We have now reached to a potential solution space for solving for kids and parents. In the next post, I will try to create an MVP to test it out with parents and kids and take their feedback.