TMCnet Feature
January 13, 2021

Improving financial literacy with the use of technology

Studies show children begin forming their attitude towards money around the age of 6. The things they learn and see around them at that age are going to determine how children perceive money as they grow up. Still, the majority of parents don’t teach children anything about money management, and schools don’t seem to do anything about it either. Students should be required to take a personal finance class in high school, yet only one-third of U.S. states demand it as a condition to graduate high school.

Today’s millennials and gen Z seem to have a more proactive approach towards financial education, but it’s still not enough to cover for the fact that financial literacy is overlooked in schools and at home. One main reason why this happens is that our parents and their parents before them lacked financial education as well, due to the limited resources they had at their disposal.

Fortunately, lack of access to information is not an issue for young generations today, thanks to one single thing: technology. Apps that allow real-time budget tracking and do the heavy lifting when it comes to financial planning are making financial literacy not only more accessible to people but more appealing as well. And not only for teenagers and adults but for younger children as well.

There is a multitude of ways technology can help improve financial education, but things will not happen overnight. Let us take a look at some of the most important ways technology can be used to help people break poor financial habits and improve their financial literacy.

Access to a wide variety of financial information

The internet has become our encyclopedia of information on any given topic, so why wouldn’t it be used to improve financial education as well? We now have access to an abundance of knowledge on various financial topics, including budgeting, investing, and saving, all of which is available with a few clicks.

The kind of information we have access to now varies from basic tips anyone should know if they want to properly manage their finances to more complex and specific guides on annuities, investment opportunities, cryptocurrency, and more. For example, 10 years ago, someone wanting to learn more about, say, annuities, would have had very little information on their hand without having to talk to a professional. Now, in a matter of seconds, they can read a step by step guide to sell annuity that contains every piece of information they would need to know.

Nearly any financial question you have can now be answered by typing a few keywords into a search engine, making access to financial education more accessible than ever before. 

Using apps to manage personal finances

Smartphones have brought us more comfort than we would have ever hoped. We use apps to talk to friends, listen to music, improve our language skills, and, now, we also have access to a variety of personal finance apps that makes developing healthy financial habits.

The thing that appeals to users most about personal finance apps is convenience. No matter where they are, they can now use these apps to improve their money management skills, learn how to invest, and break poor financial habits.

These apps can not only provide resources to improve their financial skills, but they also work as tools to help them keep track of their spending create budgets, manage their monthly payments and keep their financial details in one place.

Financial education made fun for children

The things you learn at a young age will become habits that will be very difficult to break when you are an adult. By teaching children about finances from a young age, we can start creating positive changes that will last for a lifetime.

Parents and teachers play a pivotal role when it comes to explaining to children how to more responsibly manage their finances as they grow older. Multiple studies show only about a quarter of students are ready to face the real world and deal with financial challenges.

Many parents believe their kids are much too young to learn about money or that they would simply not understand the information. It is true a 7-year-old won’t understand what stocks and dividends are, but they can surely comprehend the value of money and how to set some of their allowances aside for, say, a more expensive toy they want.

There is a multitude of financial apps designed for families, where even though children are the main users, parents are the decision-makers and can monitor what their kids do with their money. These apps allow parents to set tasks, such as cleaning the bedroom or getting ready for school in the morning alone, as well as rewards. When the task is complete, kids get their rewards, and everyone is happy.

Making banking accessible for the wide population

People with access to higher education have more exposure to financial literacy, but the ones who need it most are precisely those who struggle to meet month’s end. 12.7% of America’s population lives in poverty, according to a report made by the Census Bureau in 2017. The main reason why this happens is due to a lack of financial literacy.

By using technology, banks and financial institutions can improve financial literacy among their consumers to benefit both the people and these companies. Financial education increases banking participation and prompts wider access to basic financial services – a thing many people living in poverty lack right now.

It’s never too late to start learning, even if it seems so at times. By making information more accessible and easier to comprehend, we can develop into a better community and tackle the issue right at its roots. We are exposed to technology nearly every second of our lives, so why not put it to good use and learn how to make better financial decisions?

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