Keep it Human: Engaging Consumers Where They Are
October 3, 2023 | 1 min read
Not all debt is created equal but we can all agree that Americans have a lot of it. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit. If you are want to shock your system and watch the national debt grow real-time, take a look at the U.S. Debt Clock. To save yourself the visual ticking time bomb effect, just know that the U.S. is about $19.2 Trillion in the hole. This works out to about $60,000 owed per citizen and $161,000 per taxpayer. Add these numbers to NerdWallet’s 2015 American Household Credit Card Debt Study which shows that the “average U.S. household with debt carries $15,762 in credit card debt and $130,922 in total debt.” Subtract the U.S. Census 2014 median household income number ($53,657), and the picture starts to look a little scary. How can everything be paid back?
How Much is $1 Trillion?
Ever tried wrapping your head around the concept of 1 Trillion Dollars? How about $19 Trillion? It is not an easy task and we certainly can’t solve the national debt problem in this article. However, we can highlight some great work being done to reshape debt culture from the ground up by revolutionizing our relationship with personal debt. According to a Bank of America/Harris Interactive 2013 Poll, 32 percent of U.S. adults recognize their lack of financial knowledge has led them to make poor financial decisions, and 43 percent feel they have missed out on good financial opportunities for this reason. Financial education therefore, is the key shifting the debt trend out of the red and into the black.
Not to Fear… Enter the Apps!
For years, banks, credit card companies, fintech startups, educators, and even government agencies have tried to crack the financial literacy code. Everything from classroom lessons, video, audio, gaming and incentives have been offered in an attempt to educate the public. A few applications have started to gain traction, resulting in positive behavior changes. Here are six companies / apps leading the charge:
Deemed the “the perfect investing tool for Millennials' by Investopedia, Acorns’ low-touch approach eliminates the need for user research and allows users to save and invest money via everyday spending actions. After a user sets up an account and connects a credit card to an account, the Acorns platform jumps into action. First, the software rounds up every credit card charge to the nearest dollar and puts the difference into an investment account. Investors can also set up recurring investments, one-time lump sum investments, or generate outside investment through Found Money or referrals. Found Money (currently in Beta) is an innovative approach to make savings automatic. Using a regular credit card to shop with Acorn partner companies automatically generates investments from the partner companies to the user account. Currently the partner base is small, but as Acorns expands it could offer a rewards program competitive with the best points based rewards systems in the market.
Savings isn’t the only goal with the Acorns platform; users want investments to grow over time. By employing experts in modern portfolio theory, Acorns offers a plethora of investor options and allows users to allocate assets, diversify their investments, and rebalance their portfolios. Acorns offers many low cost, low fee ETFs. Acorns service costs $1/month up to $5000 accounts and 0.25% per year over $5000.
SaveUp takes a different tack. As the New York Times puts it, SaveUp is 'the idea is to offer the thrill of gambling without the risk.' By linking a SaveUp account with student loans, mortgages, credit card accounts, savings accounts, and 401k accounts, SaveUp allows users to track every dollar spent towards improving their financial well-being. Now for the motivation and fun…each dollar saved correlates with an accumulating point system. Points incentivize users to save and can be used to play instant-win games, lotteries, and a Super Jackpot with prizes totaling over $2,000,000. Talk about a win-win. There’s one catch though. In order take advantage of SaveUp's services, your financial institution will need to have a pre-existing relationship with SaveUp. Unlike the Acorns or Mint.com platforms which anyone can join, SaveUp is limited to its network of bank and credit union members.
LearnVest believes in making financial planners accessible to all. Connecting real financial planners with users, LearnVest takes a hands-on approach to financial education and empowerment. Instead of using robo-advisors, LearnVest pairs users directly with advisors who help build a foundational understanding around three basic financial topics: credit card debt, emergency savings, and retirement. After the basic understanding and goal setting is complete, LearnVest adds advisor sessions and conversations about personal goals and budgeting strategy. Customized data visualizations allows for both high level status updates and in-depth analytics. Budget plans offer access at $19 a month plus a one-time $89 setup fee (which includes the first month of service).
MindBlown Labs (MBL) is a cutting-edge social enterprise that creates interactive game-based financial empowerment tools. Aimed at the teenage demographic, MBL’s Thrive 'n' Shine mobile game is turn-key and curriculum ready offering that is already being deployed in classrooms. By partnering directly with school systems and non-profits, MBL hopes to empower students with money management skills at an early age. Games include lessons, assessments and an online dashboard – all features meant to engage students and offer teachers immediate feedback. Local and regional banks and credit unions sponsor MBL platform deployment in their home communities to build strong saving habits with their future clients.
You may already know Khan Academy, an online video education / lesson archive portal spanning many topic areas. Recently, Khan Academy and Bank of America teamed up to create the Better Money Habits Project. Essentially, this partnership offers a free service that enables any user to understand finances through objective and unbiased videos and tools. Eventually the partnership hopes to offer quizzes and community participation forums through the platform. The platform is free to use.
FinStrong by MX is an educational course that covers how to organize & automate your finances, how to save, how to eliminate debt, how to share what you've got, how to make the right decision when purchasing insurance, how to navigate credit scores, and more. It consists of more than a dozen in-depth videos, an assessment, a gamified progress meter, and more. Banks and credit unions can offer it to their employees as an HR benefit and they can offer it to their account holders as a way to maintain user loyalty.
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