Are you smart with the money you have? If you don’t have the money, would you like to learn how to do it? A company named Greenlight helps kids earn money from housework, set savings goals, spend wisely, and invest – all with the help of your parents, from your own credit card. flow and an application. iGeneration Youth interviewed Greenlight boss Tim Sheehan to help get you on the path to good money management.
How did the idea for Greenlight come about?
Tim Sheehan: Friends and people I work with weren’t sure how to manage their money successfully. Then I had kids, and when I started teaching them everything my parents had taught me, I thought it would be wonderful if I could help all parents to teach these kinds of things to me. their children.
I noticed that my wife, Kelly, and I didn’t have any cash with us. We all did our shopping with a debit card or a credit card, and yet we still had all these reasons why we needed to be able to give our kids money, whether it was for a stipend, a school trip, or maybe – be a sports team trip. And so because we didn’t have cash, we were still stuck with this problem. I talked to a whole bunch of other parents and they were having the same problem as well. And they also wanted their kids to grow up to be smart about money. So I started working on a simple way to instantly transfer money from a parent’s account to a child’s account – and have a debit card for kids, too.
What is the main focus of your plan?
Sheehan: Think of it as four accounts built into one. The first is the expense account, the debit card; the second is the savings account, including interest paid by parents; the third is a built-in donation account so kids can donate to their favorite charities; and finally, an account that helps teach kids how to invest by researching companies and then offering an investment to their parents. If parents approve of it, their child can actually buy a share of Apple or Amazon, for example.
How is Greenlight different from other financial education programs?
Sheehan: Greenlight works so well because kids learn by doing and with real money. It’s a real debit card with their name on it, and a real savings account.
Children learn to decide whether to buy something they really need or really need, or to keep saving and buy something else later that they might need even more. There is this concept called compound interest. Let’s say you have $ 100 and you earned $ 5 in interest on that money. The following month, you would earn interest on $ 105. Thus, each month, the balance increases.
How can you tell the difference between buying something you need and buying something you want?
Sheehan: You need food, you need shelter, you need clothing – the basic essentials. But most things are actually wants, and it’s good to have certain things that you want. So what I’ve always said to my kids, why don’t you just wait a day or a week? And if you still want this thing in a week, then let’s talk about it. Often times, if you think about it, there is probably something that you would like better and maybe it costs more. And so if you save the money, there is a good chance that you will have enough to buy the best thing.
How would you distribute the money in the first three sections of your plan?
Sheehan: Maybe 40% of the allocation is for expenses, 50% for savings, and 10% for donations. I’ve seen a lot of this stuff, or even 50% spend, 40% savings, and 10% donations.
What do you think is the best way for a child to earn money on top of the allowance?
Sheehan: Some of the kids are starting their own businesses. It could be a lemonade stand or the sale of cookies. My daughters were babysitting. My son raked the leaves of the neighbors. When I was a kid, I mowed people’s lawns.
I first got a part-time job, then over the summer I worked full-time. You would be surprised. Many people will appreciate the suggestions you make to work for them.
What is a reasonable amount to spend on something?
Sheehan: That’s a good question. What percentage of your money do you really want to spend on video games, for example. You can use Greenlight to set a certain amount of money for video games only, and it will help make sure that you don’t spend more than that amount. But I think it’s good to try and plan what you want to do with your money. So if you don’t really have a specific savings need or goal that you’ve saved your money for, then you should just keep it in your savings.
But a good thing is to realize how much you’ve saved over time just because you didn’t have something to buy. You want to have a good plan. Whenever you get money, you don’t have to spend it right away.
Did you like to save when you were a kid or did you like to spend more?
Sheehan: I liked spending more. I think most kids do. But the older I got, the smarter I got about money and realized that if I kept spending my allowance, I wasn’t going to benefit from the extra amount my parents would pay if I saved up.
But I finally realized that I could buy nice things instead of cheaper things if I saved my money first. And later I remembered reading “The Warren Buffett Way” by the world famous investor. And so I went from spending all my time and spending all my time learning to save and even invest afterwards.
What would you say to children who say they have no money to save?
Sheehan: I would say you think not, but you are. And that’s probably because as soon as they have money, they spend it. If they can just take a break and promise themselves that if they get the money, they won’t spend it right away and they will start to see it piling up. If they get $ 5 to do chores and save only $ 1, it will add up. Start by saving for one thing and get used to it.
What was one of the first things you saved up for as a kid?
Sheehan: I think it was a printer. You’ll laugh because it’ll show my age, but I had a Commodore 64, which was 64,000 or 64,000 bytes of memory. Your computer probably has 8 million bytes, or 8 megabytes.
Your website is about a podcast you started making called Million Bazillion. Some illustrations seem intended for the youngest. Is it because you want to help younger people understand the idea of spending and saving?
Sheehan: You got it. We wanted to do something for the younger ones, who aren’t quite ready for a debit card to a savings account yet. We wanted to help them start learning about money and personal finance before they became heavy users of Greenlight.
How much money should parents give children to get started when they first get a Greenlight card?
Sheehan: It depends on the family and their situation. It might be harder for one family to start with $ 20 and easier for another. Anything they can afford is absolutely fine. Children are open-minded and will adapt to anything parents can afford. The amount does not matter.
When the new part of investments comes out, do you think it will be easier for children to save their money through investments?
Sheehan: It’s good to have money to invest, and investing is just another way to save your money. The goal of investing is to help money grow faster. So even if you only have $ 2 to invest, that’s fine.
Jordan Block is an iGeneration Youth reporter living in Pennsylvania, United States.