Swedish Research Study about Children and Money
A new national study, with over 1,000 children and young adults living all over Sweden, shows that Swedish children have insufficient knowledge about money and finances.
Swedish children don’t handle money anymore. Ten years ago, over 75% of Swedish school children received pocket money. Today less than every other child receive pocket money since their parents have stopped using cash. Their pockets are simply empty when it’s time to hand out money. Most parents buy things when their child sees something they want instead.
“A lot of children don’t receive regular pocket money and that is a huge problem,” says Philip Haglund from Gimi, Sweden’s most popular app that teaches children and young adults about money. “This results in children no longer taking responsibility as consumers and therefore don’t learn what money is worth.”
As cash disappears so does our understanding of money
Last year the amount of cash in circulation decreased by 16% and kept up the downward trajectory throughout 2017’s first quarter according to SCB. Now that old coins and notes have been exchanged it is expected that the digitalisation of payment habits will continue to accelerate. “The digitalisation of the banks and payment methods is essentially positive. However, rapid change can sometimes leave certain groups behind. Banks, schools, parents and our society as a whole must all take responsibility for including children in this digital shift. Payment tools and bank services must adapt so everybody, children and adults, are able to understand and use them,” says Philip Haglund.
Swedish study shows children are falling behind
In a Swedish study of over a thousand children between the ages 5 - 17, Gimi examined the level of financial knowledge. It turns out that children are lacking the appropriate knowledge level. More than one out of four children in the ages 8 - 15 don’t know what a carton of milk costs. Many children have trouble grasping the cost of digital products, such as computer games and mobile apps. One out of five children between the ages 10 - 15 don’t know that mobile apps can cost money.
“Many children have installed apps like Spotify and Netflix on their phones, never considering that their parents pay for expensive subscriptions to these services,” says Philip Haglund.
Children are becoming financially illiterate
You can look at and touch coins and notes. It is easy for children to put money in a piggybank or build a tower out of coins, and cash is often referenced in their school books. You can’t see digital money in the same way that you do cash, since it’s invisible it often flys by. On top of that, many digital banking services are often unavailable to children. “If we don’t include everyone in the digital shift we will end up raising a generation of financial illiterates,” says Philip Haglund. In a Swedish study, we see that 1 out of 5 children between the ages of 6 to 14 don’t understand what a PIN code is. “It is evidence of Swedish banks and schools not being able to adapt services and education, leaving parents who face the task of making their children responsible for their own finances at a loss.”
The next generation faces big risks
As our society goes through one of the biggest changes in the history of personal finance, replacing cash with digital money, new services adapted for the younger age group must be created. Gimi is a finance app that helps children learn about money, preparing them for a future where they can avoid payday loans and other financial missteps. It should be one of many initiatives. If we don’t act now we can expect dramatic and negative consequences in the future that will affect both our society and the children growing up today.