Financial literacy is one of the most crucial things to master for anyone.
If you want good outcomes in life, it pays to understand money.
Yet, we aren’t teaching our kids finance — at home or in school.
Benjamin Nachman, Founder & CEO at Jassby, is trying to change that. His company is offering banking services for kids as young as 8 years old that will help parents teach financial literacy — without any boring lectures.
In today’s episode, he joined me to discuss:
- Why finance isn’t being taught to kids
- How Jassby can help
- How he’s planning to teach long-term financial wellness
The scope of the problem
How many people out there never went to a grocery store alone until college?
There’s no shame. It’s surprisingly common.
Schools often fail to teach us the most useful skills in life.
That’s why, too often, when kids branch out on their own, they have very little understanding of finance.
And that leads to terrible outcomes.
“I know that kids talk about money between themselves all the time, but there is no system-wide teaching. There is no philosophy. There’s nothing.” — Benjamin Nachman
It’s how so many young adults end up with crippling debt when they first get a credit card: if no one ever teaches you why paying the minimum on your credit card is a bad idea, it’s easy to do.
And when the benefits of saving money aren’t ingrained early, young adults, excited by their first paychecks, will be more apt to spend it all at once.
There’s good news, though: finance can be taught early.
And you don’t even have to risk boring your kids to death with a dull lecture.
Kids can learn by doing.
How to teach kids financial principles early
It’s not just the boring lectures, however.
There are a lot of reasons why we are failing our kids in their financial education, both in school and in the home.
Money is a touchy subject
Benjamin speculates that the reason we don’t talk about money at home is that we are embarrassed by our own financial habits.
“We don’t talk about money at home. People say ‘I’m not perfect myself. I don’t save enough. How can I talk to my kids about things I don’t do?’” — Benjamin Nachman
Many parents feel like hypocrites teaching their children about the correct ways to save money, manage credit, and spend wisely.
It’s understandable. Many adults — who weren’t taught financial literacy growing up, either — face serious financial hardships or deal with poor financial habits.
But that just highlights the importance of teaching finance to our kids.
And in school, the subject is most likely seen as taboo.
If you teach kids about money, you have to deal with the elephant in the room: not everybody has the same amount.
So, perhaps fearful of class warfare breaking out in elementary schools, teachers avoid the topic like the plague.
How Jassby is tackling the problem
Benjamin came upon the idea for Jassby when he realized 2 things:
- How little learning his kids were getting on the subject of finance.
- That the weekly cash allowance he was giving them was horribly outdated (and kind of a pain).
We’ve already gone over the education problem, but the company is also helping solve a pain-point for modern parents.
Cash doesn’t get your kids what they want when almost everything they want to buy is online.
Even without that fact of modernity, it helps avoid having to find somewhere to break a 20 to give your kid their $6 weekly stipend.
What Jassby allows parents to do is set up banking services — including a digital debit card — for kids as young as 8.
The services are completely free and don’t harvest you or your child’s data, relying on merchant fees rather than overdraft fees or subscriptions for the company’s revenue.
The educational component
The best part about Jassby is how it bypasses the boring lecture and allows parents to inculcate good financial habits with a more hands-on approach.
Parents can show how interest and savings work by setting saving goals and paying kids when they hit them.
“The most important things when you talk to kids about money — at any age — are the concepts of savings and interest, which go hand in hand.” — Benjamin Nachman
This approach means your kid learns the best ways to deal with money while barely even noticing that they are learning at all.
And the next time they need that XBox game, they can have the satisfaction of purchasing it themselves.
The long-term plan
As far as the company’s goals go, they are hoping the free service and assistance in financial education will entice many parents to the service.
But, long term, Benjamin envisions a suite of offerings that help children throughout the various milestones on the way to financial maturity.
It’s a banking service that grows with you.
At first, parents of third-graders can take advantage of the company’s offering for something simple, like managing an allowance.
Once your child hits around the age of 12, they’ll likely have a mobile phone. They can then use a slightly more advanced offering — like a debit card. Now they can go to stores and get some burgers with their friends.
At 16, they might start working somewhere and move onto a Jassby product helping them deposit their paycheck remotely.
And, of course, at 18, they are ready for an adult offering.
It’s a fascinating approach to the incredibly widespread problem of financial illiteracy.
And I’m sure anyone who has ever dreaded talking to their kids about finance is breathing a sigh of relief.
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Until next time!