Apps Try Putting Financial Literacy at Kids’ Fingertips

Kids of any age can research, buy and sell stocks — including fractional shares — as well as exchange-traded funds. The app including the investing option costs about $8 a month, but there’s no extra fee for trades. To trade, the child must request approval from the parent through the Greenlight app.

Tim Sheehan, Greenlight’s chief executive, said the investment option was a logical step after children learned the basics of saving and spending within their means. The option includes access to research from Morningstar, and offers short videos that explain investing concepts, like a price-to-earnings ratio.

While the apps appear promising, they make some financial education advocates wary. Lennette Coleman, president of the FoolProof Foundation, which promotes “healthy skepticism” about financial products, said it felt “irresponsible” to allow children, who may not have fully absorbed lessons about the necessity of working to earn money, saving it and spending it wisely, to invest in stocks. If apps make a game out of investing, she added, children may be more engaged — but they may also be more likely to take risks.

“There’s a lot of nuance in the stock market,” she said, “and they don’t understand those nuances.”

Tim Lambrecht, director of education at Budget Challenge, a program that uses simulations to teach students about bill paying, budgeting and investing, said that apps could get teens excited about investing, but that most emphasized buying individual stocks and skimped on information about long-term investing in index funds in tax-advantaged accounts.

“That sends the wrong message,” he said. “You have to invest for retirement; you can’t save enough.”

Here are some questions and answers about financial literacy and money apps:

Do the financial apps charge fees, and do they pay interest on savings?

Fees vary. Some apps, like Step and Copper, don’t currently charge monthly fees, but make money from “swipe” fees — fees paid by merchants when customers use their card. Greenlight charges a flat monthly fee, starting at about $5 for the basic app and rising up to $10 for a version offering the investment option and other perks.

Most apps offer federally insured savings accounts through partner banks, but pay little or no interest on the balances. Greenlight said it was now paying 2 percent on savings, for balances up to $5,000, on some accounts. It also lets parents set their own custom rate, allowing them to match whatever their child saves.