Most parents will know that the toughest negotiators they’ll ever meet are their kids at a toy store once they’ve set their eyes on yet another piece of overpriced plastic. Fighting a losing battle, they will remind their offspring how much was already spent this month on abandoned toys turning the nursery into a set on the film Toy Story.
The pain of parting with money would seem to be a foreign concept to children today – possibly because ownership becomes less tactile in a world where the piggy bank has long since gone to the happy hunting grounds,” according to Louise Ferslev, CEO and Founder of MyMonii, an allowance app for families:
“Since cash disappeared, money has become a distant number on a screen and represents no real value to children. They go shopping with their parents, badger them for a gadget and watch them wave their payment card and smile at the cashier. In the eyes of the kids, it’s a magic card – the closest we get to a money tree - and if we don’t educate them, they’ll go into adult life without making the connection between input and output,” says Louise Ferslev, a former elite golf player turned entrepreneur.
Since its launch in late 2015, the MyMonii app has been downloaded by more than 50,000 families in Denmark, with more than 110,000 individual downloads. The app has a parent’s and a children’s view and allows parents to allocate allowance, assign chores with or without remuneration, but most importantly, it allows the child to keep track of his or her balance:
“We get a lot of good reviews from kids in App Store, pleased that they can finally prove to their parents that they owe them allowance,” says Louise Ferslev smilingly.
A link between work and money
Louise Ferslev’s concern for a new generation growing up without appreciating the value of money is shared by Jonas Hedman, Professor MSO, Department of Digitalization, Copenhagen Business School. A study carried out by Hedman and colleagues in 2015 showed that people were willing to pay more when paying with debit cards than with cash:
“Basically, when you pay with cash, you let go of something physical, and the higher the denomination, say if it’s a 100 dollar bill, the higher the mental pain of parting with it,” Hedman explains.
In his mind, children could experience even less mental pain of parting, although the original study didn’t encompass youngsters:
“I don’t think 7-13-year-olds would be very familiar with cash, which makes us assume that they would face a higher risk of overspending as payments become more and more convenient. Also, I don’t think young people have an intuitive understanding of the relationship between work and money. To them, money is simply something you have on your account or that you get from your parents in a seemingly endless stream,” Hedman worries, recalling how cashing in his first pay check at the bank made the link between work and money very tangible.
He is concerned that young people tend not to plan very far ahead:
“We’re advised to start saving for our pensions when we’re in our twenties, but it’s hard to see the link between what you spend today and the size of your pension when you’re going to retire in forty years’ time. You need much more immediate goals to motivate young people to spend responsibly,” Hedman asserts, suggesting fintech should be allowed to include a feedback mechanism in the payment system, perhaps sending a text message if your monthly spending exceeds your limit.
A gap in the market
MyMonii offers a white label app to banks, and so far, Arbejdernes Landsbank has 2,000 users of the app. The fintech start-up also collaborates with the debit card Dankort issued by Danish banks on behalf of Nets, with five million cards currently in circulation. The app allows parents to easily and securely add their debit card to the child’s app and set a spending limit which can be changed in an instant:
“This way, if a child has 50 kroner on his or her app, it can pay at a store by phone. Children already carry their phones with them, so it’s very convenient,” explains Louise Ferslev, adding that their intention is for the app to spur a dialogue between parent and child on the value of money, besides simply helping them keep track:
“When your child craves this and that at a store, you can simply say: ok, so that amounts to 900 kroner – let’s check your balance in the app - it says there’s says 45 kroner left, so unfortunately, we’ll have to put it back,” she illustrates, adding that many reviewers praise how saving up becomes incentivised by the app’s visuals.
The MyMonii app caters for a gap in the market for children aged 7-13. When she speaks to banks, Ferslev gets a sense of how being a start-up is an advantage:
“We’re not a project adding to an existing portfolio of traditional banking products. We approach the task with an outside-in perspective, and we speak to our users every day, finetuning and developing new functionalities,” she says.
‘Do consumers pay more using debit cards than cash?’, Electronic Commerce Research and Applications, by Emma Runnemark, Jonas Hedman and Xiao Xiao, 2015