Fintech Greenlight is building ways to let kids invest in stocks3 min read
- Greenlight, the personal financial management app for kids and parents, has seen its user base double since the start of the year.
- With this growth, Greenlight is building an investing product, where kids can propose stock and ETF trades to their parents.
- “To build true wealth, you really need to learn how to invest,” Tim Sheehan, cofounder and CEO of Greenlight, told Business Insider. “So we want the kids to try to learn that as early as they can, and to do it in a supervised environment.”
- Greenlight is backed by investors including JPMorgan Chase, and Wells Fargo.
- Visit Business Insider’s homepage for more stories.
A personal finance app for kids that’s managed by their parents has doubled its user base in the first half of this year.
Greenlight, which currently offers debit cards and savings accounts, is eyeing more financial products to launch for its parent and child users off the back of that growth.
“We’re trying to help parents raise financially smart kids,” Tim Sheehan, cofounder and CEO of Greenlight, told Business Insider.
Greenlight was founded in 2014, offering a debit card that parents can give to their kids. Parents can pay allowances, track chores, and set store-specific controls on spending. In 2018, it launched savings accounts that includes parent-paid interest. And now, it’s working on an investing product for kids to buy and sell stocks and ETFs, slated for launch later this year.
The Atlanta-based fintech has attracted some high-profile investors, raising $81.5 million to date from the likes of JPMorgan Chase, Relay Ventures, and Wells Fargo.
With parents and kids stuck at home, Greenlight has seen explosive growth
Greenlight’s user base is approaching two million parents and kids, Sheehan said.
“Our growth accelerated when the pandemic hit and it continued to accelerate during the pandemic,” he said.
Most schools don’t teach personal finance, so it’s often left to parents, Sheehan said. Now, with more time at home, parents are using Greenlight to show their children the importance of spending and saving.
“Kids are at home with their parents, and it’s a perfect opportunity to try to teach them, if the kids are particularly young, that money doesn’t grow on trees, you have to earn it, you have to work for it,” Sheehan said.
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Parents can pay their kids as they do their chores via the Greenlight app, and kids can set aside money in savings with parent-paid interest. Across its user base, the average parent-paid interest rate is around 18%.
As its users come of age, Greenlight has seen that many college students take their Greenlight cards with them. And Greenlight is thinking about more products targeted toward college students and young adults, Sheehan said.
Enabling kids to invest in the stock market is next
Beyond spending and savings products, Greenlight is now building an investing feature, planned for launch before the end of the year.
“To build true wealth, you really need to learn how to invest,” Sheehan said. “So we want the kids to try to learn that as early as they can, and to do it in a supervised environment.”
The decision comes as retail trading has exploded in recent months, with fintechs like Robinhood reaping the benefits.
Kids will be able to propose stock and ETF trades to their parents in the Greenlight app, which parents can then approve. The product will also enable kids to buy fractional shares.
Early in his career, Sheehan helped launch Yahoo Finance and worked as a product manager at E-Trade.
In addition to his experience building investing products, Sheehan said the idea for Greenlight was also inspired by his own approach to financial education with his kids.
“I’m drawing on all of that to try to help kids everywhere really learn how to invest,” Sheehan said.
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