57% of American adults said they received an allowance growing up, according to a 2016 poll by the American Institute of CPAs. Of those, 90% did at least some chores to get the allowance.
While this survey is over 5 years old, the popularity of giving kids an allowance is still alive and well. Over 60% of American parents of kids ages 4 through 18 say they give their kids allowance, according to research by Finder.
But even if allowance is still a thing, in a world becoming more contactless giving kids money in the form of cash may be on its way out.
That means the use of allowance to teach kids the value of money is becoming harder, since kids have less of a physical quantity to attach to their spending.
That’s the challenge kid banking app GoHenry has set out to solve. The company was founded in 2012 by a group of parents who wanted to teach their kids about earning, saving, and budgeting money while still monitoring their spending in a digital environment.
“We created GoHenry with the goal of helping kids learn about money in a practical way. And we’ve always been really focused on offering a high quality experience that fits naturally into the family and is rooted in that really simple mission, which is to make every kid smart with money,” said Dean Brauer, co-founder and president at GoHenry.
GoHenry targets parents of kids between the ages of 6 and 18. The app started out in the UK and eventually scaled to the US. While these demographics do have some small differences, like a varying degree of focus on credit, they both have the same attitudes towards improving kids’ financial understanding.
“Surprisingly, the UK customer and US customer have been incredibly similar,” said Brauer. “The thing that ties them together is this real desire to help kids with this area of financial education in their lives.”
According to Brauer, a lot of companies talk about financial literacy on their sites but don’t actually go deep into the sector. The goal with GoHenry is to make it a ‘a fully fledged payment and banking app on one side and a financial education experience on the other.’
When a parent opens a GoHenry account, he can open up to four different subaccounts for his kids.
Through the app, parents can block and unblock the card, set spending limits, choose where kids can and can’t use their cards, and assign chores. When a kid completes the chore, he can mark it off as done. He can also get instant notifications regarding the kids’ spending.
The kid, meanwhile, sees a different screen when she logs into the app. She can set up her own savings goal, earn money by completing tasks her parents assign her, and budget her weekly allowance.
The debit card that comes with the account is customizable. At an extra cost, the card can have a different design and background to make it more personalized for the kid, including putting his or her name on the card. That means it can say GoBilli instead of GoHenry, for example.
The limited-edition Spider Man theme is the newest card design new customers can choose, made available in line with the upcoming Marvel movie.
In October, GoHenry added a gamified component to its offering, called Money Missions, which includes videos and interactive quizzes on financial literacy topics. Kids earn badges and points as they go through levels. Categories have names like Intro to Investing, Borrowing & Credit, and Spending Wisely.
Regarding challenges ahead, Brauer says cash is the biggest competitor. “80% of parents are still managing their kids’ money in cash today,” he said.
In terms of looking at the bigger picture and where banking solutions for kids are going, microniching may be the chosen path.
“it’s a very large addressable market, and there won’t be a ‘winner takes all’ situation, just like neobanks have been able to grow side by side,” said Brauer.