The Impact of Financial Literacy

In 2004, Congress declared April to be National Financial Literacy month, a topic BusyKid focuses on year round. This April it is particularly topical given the economic insecurities associated with the COVID pandemic. Financial literacy can be defined as a set of skills and knowledge which empowers individuals to make informed decisions regarding budgeting, investing, and managing money in order to effectively achieve financial wellness. As a society, people are beginning to realize how financial wellness can be connected to mental and social wellness, and the pandemic heightened awareness of the need for real world financial education to be prioritized.

Recently, the National Financial Educators Council (NFEC) conducted a survey in which they asked over 1,500 respondents divided into six separate age demographics, “During 2020, how much money do you think you lost because you lacked knowledge about personal finances?”

The answers were startling. The NFEC learned that respondents estimated they lost $1,634 individually. By taking this data and making the same inference for all the adults in the United States, this would mean financial illiteracy cost $415 billion in 2020. You can see the complete results here; a clear trend in which a lack of financial education is causing greater losses every year.

A new financial literacy survey backed by Charles Schwab asked Americans what they would teach their younger selves about personal finance when considering their current competence. The more than 2,000 adults polled stated: the value of saving money (59%), basic money management (52%), and how to set financial goals and work toward them (51%). Nearly two-thirds (63%) of U.S. adults chose financial education as the most important supplementary graduation requirement to math, English and science.

So, if parents believe financial matters are this important, then why is it often missing from required coursework in schools. This is where BusyKid can help. To provide this sorely needed financial education, either in totality or in supplementation of what American schools currently offer. In a recent interview with a young BusyKid user, Emersyn, she described BusyKid as very helpful for her to learn about real life money practices. She said, “Now I look at how much something is instead of just thinking ‘I want it.’”

The BusyKid app teaches financial literacy to children in the following ways:

• Every Friday is payday and establishes a routine, so kids know what’s expected of them
• Children can participate in determining the Save, Share, and Spend percentage breakdown of earned allowance (with parents ultimately controlling the allotments)
• Use of a prepaid Visa card to make choices in the real world and learn to live within a budget – when the money’s gone, it’s gone!
• Allowance can be earned by completing chores, with more challenging tasks correlated with higher payments
• Investing in real stocks such as Disney and Apple
• Setting specific saving goals
• The option to request to “work overtime” to earn more and reach goals faster

The CEO of BusyKid, Gregg Murset, saw the need for financial proficiency as early as 2011, but again, the ramifications of financial illiteracy have become increasingly dire over time. It’s more imperative than ever to provide a hands-on financial education for kids. Stuffing dollars into a piggy bank doesn’t cut it anymore – kids need to learn in a cash-free environment that is representative of the real world. By using the BusyKid app, children are presented with choices and consequences, encouraged to develop a strong work ethic, develop sound financial reasoning, and take a long view to financial wellness that includes sound investments and saving.

When it comes to financial education, BusyKid helps kids to be top of the class, prepared to charge into their futures armed with knowledge and confidence!