Technology has enabled consumers to bank, transact, invest, and accept payment from anywhere in the world at any time.
That’s a good thing—right?
It is if you’re financially educated according to Vivi Friedgut, Founder and CEO of Blackbullion.
The constant power to use, distribute and invest money guarantees impulsive decision-making for consumers unequipped with adequate financial education.
In this episode of Payments Innovation, we are joined by Vivi to discuss the dangers of unchecked access to banking apps and how financial education can break the cycle of intergenerational poverty, prevent debilitating debt, and accumulate wealth.
“We assume that people understand how to use their money, but we’ve never taught people how.”— Vivi Friedgut
Dangers of Modern Banking and Fintech
There are countless benefits of digital banking—it makes investing accessible, loans more attainable, payments easier, deposits direct—but with important financial decisions at the tips of consumers’ fingers, these benefits can quickly devolve into short-sighted regrets.
For example, cryptocurrency and trading platforms like Robinhood are intentionally designed as games to keep users engrossed.
For beginning investors, this model is low-risk and all the more addictive especially when it’s in their pocket at all times of the day.
“Technology can enable the solution, as well as enable a lot of the problems.”— Vivi Friedgut
Vivi likens the app to gambling, enticing users to invest a seemingly nominal amount of money only to lose it in the long run.
Pay-day loans and “buy now, pay later” payment schemes are the kinds of loans that are readily available and just as equally deceptive.
Built to prey on desperate circumstances, these forms of unsecured loans seek to make a significant profit off of people who don’t know any better by charging exponential interest rates over time.
The answer to financial stability doesn’t have to be complex. What it comes down to, according to Vivi, are a few simple steps.
The focus of Blackbullion is to educate young people on how to take control of their finances so that they’re empowered to live life on their own terms.
Education is at the core of financial wellbeing and is strengthened by technology and planning ahead.
Change the education system
Why is it that student debt in the United States has climbed to $1 trillion to date? And why is the UK experiencing a similar student-debt crisis, even in the wake of financial literacy requirements at universities across the country?
What the education system fails to do is teach its students practical, applicable ways to manage their finances and set themselves up for a stable future.
This means teaching how to invest, demystifying trading and loan myths, demonstrating balanced budgeting practices, applying for secure student loans and aid—the list goes on.
Showing young people how thoughtful financial planning and decisions can impact their futures and grant them the life they desire is fundamental to preventing catastrophic financial trouble.
Leverage the tech
Vivi believes that the same technologies that have the power to financially upend its users, can benefit them just as well.
“Let the tech do the heavy lifting”, she says, and use it to procure savings.
Instead of waiting until the end of the month to save leftover earnings, setting up an automated transfer to a nontaxable savings account is one of the simplest, most effective methods to cement a secure future.
Consumers are more likely to continue saving money if they never saw it to begin with.
Another simple way for young people to build financial prosperity is to start investing as soon as they can.
This means that when the first official paycheck arrives, it’s time to open a retirement fund and begin putting 10% of it away.
Vivi urges young people to start saving their money now as they don’t realize to what extent that money can compound and grow into a house deposit or solid fortune to retire with.
“I’m a huge fan of investing; it is still the best way of accumulating personal wealth for the future. But without the education, you’re playing in the dark. ”— Vivi Friedgut
These are only a few of the ways Blackbullion helps people take responsibility for themselves and foster a financial future they deserve.
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Until next time!