Piggy banks may still be useful for some — but Greenlight, an Atlanta-based debit card and financial trainer app, is aimed at kids and parents as the latter teach the former about how to grow and manage money in 2022 and beyond.
"Greenlight is the family finance company that's on a mission to help parents raise financially smart kids," Greenlight founder and CEO Tim Sheehan told Fox News Digital in an email exchange on Thursday, Jan. 27, 2022.
Greenlight, a start-up that's only a few years old, today serves more than 4.5 million parents and kids. The company says families have saved more than $200 million and invested more than $10 million toward their financial futures through its programs.
"Financial literacy is one of the most important factors in our health and well-being," Sheehan also told Fox News Digital, adding that it's "the gateway to building a strong financial foundation for the future."
He also that children need to understand the "difference between wants and needs. This is a financial fundamental … Once you help your kids nail this down, they can start learning how to spend wisely."
What does the Greenlight card do?
The basic concept is simple: Teach kids how to handle money via a debit card that requires parental guardrails and guidance.
After signing up for the service, parents load money onto the child’s debit card.
Kids can then use the card to make purchases virtually wherever Mastercard is accepted. Parents can also help kids set up the card to work with Apple Pay and Google Pay.
What does it cost?
The price of the basic service plan starts at $4.99 a month for up to five children.
Plans that include investing for kids and parents, 1% cash back, and other premium perks are $9.98 per month.
How does the app work?
There is more to Greenlight than a debit card. Its app is useful for basic budgeting and handling transactions — and can be used for investing, too.
With the app, kids can save, donate, and invest money. They can keep an eye on their balances, set financial goals, and research stocks.
For example, a child might set a goal of earning and saving money for a new skateboard — then track his or her progress toward earning enough money to actually make that purchase.
Parents can set up the app to allow kids to experience the real-life rewards of earning, spending, saving, and investing — with a built-in cushion that prevents them from making any seriously devastating choices.
The app enables parents to put training wheels on kids’ financial habits. When the kids are ready to do it on their own, the training wheels can be removed over time.
How does the card help kids?
Young people aren't often taught how to be financially responsible or literate — with dire consequences. Young adults may complete high school and even college without a fundamental understanding of how to earn, save, and grow their money over time.
With the Greenlight app, kids learn early on to connect the work they do (such as household chores) with expanding balances — then to connect those growing balances with greater buying power.
When parents offer monetary incentives based on the quality of chores done, kids learn that work done well will be better rewarded than work done poorly. This valuable lesson will pay off when those children grow up and enter the workforce.
One 14-year-old based in Alaska used his savings from Greenlight to publish a book series, CEO and founder Tim Sheehan told Fox News Digital.
Though parents can put strict controls on how much a child can spend in a given category, some kids learn best by actual experience — even if that experience leads to temporary disappointment.
Some experiential learners might benefit from having the opportunity to spend a bit too much on frivolous items — then see exactly how poor choices delay the achievement of larger, more desirable goals.
Parents can allow kids just enough over-spending in one budget category to teach a lifelong lesson.
Why are adults using this card, too?
As a fintech app, Greenlight provides adults with a means of investing. "Fintech" refers to the use of technology to "improve and automate the delivery of financial services," according to Investopedia. (Cryptocurrency, robo-advisers, and blockchain-based open banking are a few prominent examples.)
With Greenlight, parents can set up brokerage accounts to help fund college tuition, first cars, or other sizable expenditures.
Families can also use the app to research investments in stocks and EFTs.
How have young people improved their ‘financial literacy’ through these products?
Greenlight's CEO Sheehan told Fox News Digital that in his view, "Gen Z is the most entrepreneurial generation to date, with 62% of Gen Zers indicating they've started or intend to start their own business."
He said that many "Greenlight kids" have become entrepreneurs and begun their own businesses.
Sheehan added that a 12-year-old girl used the card and app to start her own face mask business during the pandemic — and that she now donates 20% of her sales to charity. Another young person, a 14-year-old based in Alaska, used his savings from Greenlight to publish a book series, Sheehan said.
What's the biggest mistake parents make in teaching kids about money?
"The biggest mistake parents make," Sheehan said, "is not talking about money."
He added, "Kids and teens need to be taught that money is earned along with the importance of saving, spending wisely, and investing for the long term."