How much did you know about investing when you were thirteen?
About 30% of adults under the age of 45 have a relatively low level of financial literacy, according to a survey conducted by the TIAA Institute.
Tim Sheehan, CEO and co-founder of family finance app Greenlight, joined Yahoo Finance’s the Final Round to discuss gaps in adults’ money knowledge and how personal finance apps like Greenlight are helping parents pass on better knowledge.
“Adults aren’t even aware of some of the gaps in their [financial] knowledge,” said Tim Sheehan, CEO and co-founder of Greenlight, in an interview with The Final Round. “All of the parents that we’ve talked to know that they want their kids to be smart about money, even if they don’t know everything on the personal finance spectrum — they know that they want their kids to be savvy about it.”
Sheehan said adults can have gaps in their knowledge about spending wisely, saving, investing, and establishing credit.
Sheehan said the Greenlight app and debit card, part of a growing market of family personal finance products, help families get serious about personal finance. With the app, parents can monitor their child’s spending, individually approve their purchases, and set savings goals. Sheehan said Greenlight helps parents encourage their children to develop healthy financial habits early in life to build a foundation to a stable financial future once they’re adults.
“By using Greenlight, kids start to learn things like making trade-off decisions,” Sheehan said. “Should I hold off on buying this thing, even though I really want to get it for instant gratification, and save my money for something better down the road?”
Greenlight is not without competitors: products like Goalsetter, which boasts a similar business model, encourage families to grow their savings alongside one another. But Sheehan doesn’t feel threatened by the swelling of the personal finance space.
“Some people are approaching it in different ways,” he explains. “We’re trying to look at the whole personal finance spectrum, and help kids learn as they go.”
Olivia Balsamo is a writer and producer at Yahoo Finance. Follow her on Twitter @BalsamoOlivia.