Flashing a Mastercard – aged eight
Are banks being helpful or cynical when they target our children, asks Sam Meadows
Children’s access to smartphones from everyounger ages is creating another problem – or benefit, depending on your viewpoint. Smartphones, and the related apps, are providing them with new ways to spend (and save, and manage) money.
For some this is a nightmare: they cite horror stories of children spending their way through tens of thousands of pounds on their parents’ ipads, phones and other devices. But for many parents the new array of accounts, apps, and other financial services aimed at the young and very young are positive and educational.
Traditional banks’ current accounts are aimed at those over 16. But new services offer children as young as eight comparable services – complete with a contactless Visa card for payments – operated online or via a smartphone. And they tend to have been designed with the parent, as well as the child, in mind.
Some providers allow parents to view their child’s spending and even put a total block on the account, allowing an element of control. But the decision to make the service available to children as young as eight has raised eyebrows. Jennifer Thomas, a 15-year-old from near Kilmarnock, has been using the bank account app Nimbl for just under a year and said having her own card has given her a newfound feeling of independence. “I’d never had a payment card before,” she said. “You feel a bit more grown up. I also like having my money in there. I know how much I’ve got, and that it’s safe.”
Jennifer also uses a feature on the app that automatically transfers a small amount of money to a separate savings account whenever a purchase is made. It is this kind of forward planning that convinced mum Susan that something like Nimbl is a good idea.
“I’d been aware of it for a while and decided to go for it at the end of last year,” said the 39-year-old. “I was interested to see whether she would spend everything. She was actually sensible. You’re saying, here you go, this is it and it’s yours to budget.”
While Mrs Thomas says she would have signed Jennifer up for Nimbl when she started secondary school had she known about it, the company is targeting far younger children. It offers children of eight a Mastercard, and founder Clint Wilson said he would have made it available to even younger children if focus groups hadn’t suggested that this would not be popular.
While children have access to a payment card, such as Mastercard or Visa, they cannot borrow with services like Nimbl. Instead, the accounts have to be pre-funded by their parents or others.
Other apps that offer similar services include Pigby’s Fair, created by Natwest to help to introduce children as young as four to money; and iallowance, which allows parents and children to track spending (and even the successful completion of chores). Independent charity Young Enterprise, which aims to encourage schools to prioritise practical business skills to connect education to the world of work, has developed a framework that sets out targets for learning about money from the age of three (see box).
Russell Winnard, from the charity, said it was important for financial education to become embedded across all subjects, rather than tagged on to “citizenship classes” – as is currently the case. The existing set-up was pioneered by Michael Gove when he was education secretary. Mr Winnard wants the subject to go into the primary curriculum, too. “It’s on the curriculum for secondary schools but primary level is so important. That initial engagement with money is vital to a child’s later attitudes.”
He said a major issue was that many schools and teachers do not feel confident delivering financial education – but there is evidence to suggest that GCSE students will actually perform better in exams if their teaching has been framed with money. “In maths exams, so many of the questions are money-based,” said Mr Winnard. “If children have been taught the skills and told how this relates to money they may actually do better. We hear time after time from teachers delivering this who say ‘we thought we were going to be teaching something really boring, but the children were really engaged’.”
Critics say that earlier talk of money in a child’s life risks being part of the increasing pressure to “grow up sooner”. There is also scepticism about the role played by banks and other financial institutions that market their deals as educational, when their primary aim is to capture new customers.
Consumer psychologist Dr Dimitrios Tsivrikos of UCL acknowledged these risks but said the rise of technology meant parents and children had limited choice. “The theory of economic socialisation is that the way to turn young children into healthy spending adults is to expose them to money early on,” he said. “Children are being exposed to spending choices much earlier; for example through being prompted to buy characters or other items in their favourite games. They are becoming purchasers, even before they have access to real money, so we do need to teach them these things.”
‘Children are becoming exposed to spending choices much earlier’