The app builds on the Swedish egalitarian ethic of personal finance
Financial inequality has become an important factor in the growing societal rift in the United States. State and local governments have taken strides to address this problem by raising the minimum wage and requiring personal finance education in high schools. In fact, Florida became the eleventh state to mandate personal finance coursework as part of high school graduation criteria. Twenty-six other states have 54 personal finance education bills pending.
Of course, financial literacy goes hand in hand with a living wage. So, teaching the next generation of voters to budget, build savings, invest, achieve financial goals and manage debt is an essential part of creating a more equitable society. US Treasury Secretary Janet Yellen told members of the federal government’s Committee on Financial Education and Education last May that while it’s not a panacea, “… education about how to handle personal finances can have a lasting and positive impact on people’s lives.” .
However, the United States is somewhat behind in coming to this realization. Sweden has recognized this problem since 2011 when the country’s National Education Agency introduced a curriculum for personal finance education to the school system. The fintech sector has seen the financial literacy gap widen to working adults. To this end, in 2012 George Friedman founded Swedish startup Qapital, a personal finance management (PFM) app. Two years later, the company launched in the United States, where it now has two double headquarters. So far, Qapital has helped its users save nearly $3 billion collectively.
Qapital co-founder and Swedish citizen Catherine Salisbury notes that PFM apps for US fintech firms are like payday lending with the primary goal of monetizing users. “In Sweden, there is a fundamental belief that people must be able to live lives free of financial stress in order to be able to live and thrive,” she said. Qapital wonders why it’s so hard for 80 percent of Americans to go about their day without being so financially stressed and we want to fix that because government and society aren’t. We want to treat our customers privately with the things that the government handles for people in Sweden.”
Salisbury cites retirement as one example. Users usually turn to Qapital when they are about to embark on an important life event that requires some financial planning such as starting a new business, getting married, having a child, buying a house or even starting an independent career.
The app is designed to help users reach specific financial goals by helping them fundamentally reallocate disposable income in such a way that they don’t feel like they are reducing their lifestyle. Salisbury describes the process as helping users modify certain behaviors and habits to reach their goals effortlessly.
“Our users are looking for a simple way to control their money that doesn’t make them feel overwhelmed or deprived,” Salisbury said. “They want a system that helps them make good financial decisions effortlessly.”
The app also offers a budgeting feature, which goes along with the concept of moderation in spending habits, as well as an automated investing feature.
Qapital users have also found another purpose for the app: teaching their children about personal finance and especially setting goals and making trade-offs in order to achieve their financial goals. Currently, Qapital also has a joint financial advantage, the “Qapital Dream Team”, for couples who share the same ambition. According to Salisbury, the company is now looking into adding discount cards for children that will be linked to a financial account with their parents. But even without these features, parents still open accounts with the intention of teaching their kids money management in order to teach them to save for purchases like Xbox or iPhone.
The concept of debit cards for children is certainly not new, as it is already being offered by major US financial institutions such as Chase and CapitalOne. But the new Qapital feature designed especially for children will certainly be in the spirit of the Swedish company.
At Sweden’s World Finance Week 2021, the country’s financial watchdog Finansinspektionen It collaborated with the Museum of Economics, the Swedish Bankers Association and seven other financial entities to launch “pingalabitor The Money Laboratory, an educational online game that teaches children everyday economics. The Swedish Bankers Association has also created a financial test and several online lectures for high school students.
We hope Janis Yellen and the US Commission on Financial Education and Education will take note of these additional educational tools.
Image credit: Tirachard Kumtanom via Pexels