Do Children Dream of Electric Money?

“I don’t want to waste my money, Dad!”

Hearing my seven year old daughter say that to me as I showed her the latest version of the pocket money app we have been working on for over a year was music to my ears. It meant the penny had finally dropped — pardon the pun — that invisible, digital money has rock solid value.

When she made the above utterance, she was on the cusp of a tough decision — twenty hard-earned gems for a hat shaped like an angry croissant for her character in the app, or save the gems for use elsewhere, later on. There and then, she elected to restrain herself and not blow her steadily built finances in one go. I was amazed — she never objects when I tap my bank card in a toy shop for a ‘LOL Surprise!’ or another handball which will end up on someone’s roof.

One in four parents admit that their child had made an unauthorised purchase online

Myself and my team mates at Cauldron always had a hunch there would be other people like us out there. Others with young children who might be concerned about their kids’ understanding of money in this increasingly cashless, digital world. So we commissioned some proper research* to see if our gut instincts were right. We were blown away by the results. Based on a survey of 1000 UK parents who have at least one child aged 4–10 years old, we discovered that a quarter of parents admit that their child had made an unauthorised purchase online, and two thirds are losing sleep over (OK, let’s say rather worried about) their kids being exposed to opportunities to spend ‘real’ money on websites or in apps.

It got worse. When asked specifically about another hot topic — virtual and fantasy currencies, such as those you might see in games — one in three UK parents said they were unsure if their child understands the difference between real money and snazzy things like gems, or other such metaphorical monetary tokens.

One in three parents are not sure if their child has the right level of financial literacy for their age

Safe to say, there’s a lot of us who probably feel that our kids — as savvy as they might seem — need to be taught the value and meaning of non-physical real world money, and be educated regarding the implications of virtual currencies.

The research we asked Kantar to carry out for us was designed to look into parental attitudes when it comes to their children’s level of financial literacy and their understanding of how money works. Financial literacy includes the knowledge that money is earned, that it can be spent or saved, and that it can most certainly run out. We wanted to know if parents felt their kids had a good enough grasp on these basic concepts, and, more tellingly, whether or not they honestly felt their kids understood the connection between physical money (coins and notes) and digital money (online banking, contactless debit cards, in-app purchases, etc).

We braced ourselves for a much higher proportion of people saying they were confident that their kids were OK on these fronts, but as I have stated above, we were bowled over by the dramatic outcome. A third of those interviewed also stated that they are simply unsure if their child has the right level of financial understanding for their age, and 80% said they think it is important that their child learns financial literacy concepts from an early age.

80% of parents believe it is important for children to learn about money from an early age

It proved to us that our instinctive urge to find a creative way to help tackle these apparently universal concerns was right, and that our efforts over the last twelve months have hopefully been worthwhile.

Since early 2019, Cauldron, the creative division of fintech pioneers Thought Machine, has been collaborating with renowned games studio Glitchers to make a safe, dual-purpose app with a game-like interface that could help parents manage the pocket money they give, and help children develop the financial literacy skills they need for the modern world.

We called the app Nestlums, and it is our first self-released product into the public domain.

“I think your Nestlum looks pretty relieved that you didn’t blow twenty gems on that lush hat, Ivy!”

True story.

*The research was conducted by Kantar UK on behalf of Cauldron, in May 2020. Parents who own a mobile device and have at least one child aged 4–10 were interviewed via an online survey with a total sample size of 1000.