An early-stage San Diego startup is attempting to train teenagers about personal finance by mixing aspects of games and social sharing.
Ced Funches, founder of financial literacy startup Schooold, has created a prototype for a program that will deliver bite-size financial lessons to teenagers' smartphones, encouraging them to complete tasks and take quizzes on items like compound interest, managing credit card debt and other key topics. He plans to inspire usage by incentivizing young adults to share the content with their friends and to compete with them for leaderboard status, the digital equivalent of a trophy case.
Funches hopes the app will help teenagers to learn more about financial education, an area many say is still lacking in the American education system.
"They taught us Christopher Columbus discovered America... and that's a lie. Why didn't someone teach us about compound interest?" said Funches.
Funches' work comes as institutions are trying to digitally reenergize the ways in which they help teach young adults about finance when so few under the age of 35 have any savings at all.
Banks like BBVA Compass, U.S Bank and many other institutions partner with education technology company EverFi on initiatives. Bank of America works with Khan Academy to explain money through infographics, videos and other formats designed to be more engaging than just black ink. Regions Bank launched a mobile app golf game meant to train millennials on finance. And in February, various bank agencies joined forces to publish guidance meant to encourage institutions to develop and implement youth savings programs.
The Consumer Financial Protection Bureau, meanwhile, announced Tuesday it was launching a nationwide effort to advance financial education in schools, publishing a research guide designed to help state policymakers craft an effective system.
"We have watched too many Americans struggle to manage their affairs within our complex financial system," said CFPB Director Richard Cordray. "Financial education in our schools is critical to the financial well-being of future generations. The resource guide will allow the CFPB to serve those policymakers looking to make progress on K-12 education."
Dan Latimore, senior vice president of banking for Celent, said the need to educate is intensifying for an audience who is growing up with digital currency that's more intangible than, say, a hefty roll of quarters gifted by a grandparent.
"It is just another hurdle," said Latimore.
But making finance interesting to a broad audience is a tough challenge. Latimore said tying the lessons to real money like allowance is a way to drive downloads for educational apps.
"I can't imagine people looking for financial literacy solely for the sake of financial literacy," said Latimore.
He added that there are opportunities to motivate people to engage with such content by gamifying the lessons.
"If badly designed, it's just dry as toast," he said. "The notion of gamifying and using social [strategies] is critical to make it a little more interesting."
Funches' work with Schooold is designed to do just that. He especially hopes it will help young customers avoid some pitfalls, such as incurring repeated overdraft fees, at a time when many Americans are living paycheck to paycheck.
Funches, who grew up in poverty, added that his work is aimed at a problem many mobile apps designed for underbanked audiences are overlooking: their algorithms could very well be spitting out a visual of just how broke someone is. His approach is to make consumers more aware of financial situations that could put them in the red before they do. Unlike many personal finance management apps, he does not plan to let people link in bank accounts to Schoooled.
"You don't need to remind someone who doesn't have money they don't have any money," said Funches. "It's a pretty depressing app."
He said the curriculum in the app is not academic, but instead comes from "people who make individuals" into millionaires.
Funches said there's a need to get ahead of the problem and help teenagers become savvier for situations like getting bombarded with credit card pitches on college campuses before they are forced to learn by trial and error.
"It's not trying to teach," he said. "It's training. This is what this means. Period. Users behavior are being trained with future proof mechanisms; p2p lending, budget pitfalls, built-in 80/20 savings rules and social sharing + lending."
He's courting partnerships with banks, social media companies and others to help distribute Schooold. His launch date is targeted for 2016 on something he envisions can be used as a step to help demythologize the financial fairy tale.
"We tell them: 'just work hard and if you are a good person, things will work out for you.' Umm no," Funches said. "Money makes money. Period."
His financial education pursuit is shared by other entrepreneurs. HT Mobile Apps in Michigan, for example, has created an educational mobile app with game features for an even younger audience: children.
Kathleen Craig, founder and president of HT Mobile Apps, created Banker Jr. to help get children acquainted with financial basics and to replace what some banks distribute today: paper registers.
Recently, the mobile app was redesigned to better emphasis fostering a dialog between parents and their children. The app includes features like tracking allowance and chores, for example. A handful of institutions nationwide will be live on the updated app by early May.
Banker Jr. can be used to help get children used to concepts like savings and to make the early bank hellos come through a very importance channel: digital. Some of Craig's customers are also trying to use the investment to earn Community Reinvestment Act credit.
Craig, however, sees a need for the industry to more forcefully work together to advocate for financial education just like how the dentist community rallies together to promote good hygiene habits.
"We do not wait until kids are 15 to teach them to brush their teeth," said Craig. "We need to band together and advocate for financial education."