Another brick in the wall: how Bloom is helping teens build financial literacy skills

Young people who leave school may know some biology, some geography. They may be able to reel off famous historical figures or explain Pythagoras’ theorem. But many will enter the world of work with only the most basic of financial literacy skills. Why?

Bloom co-founders Allan Maman, Samuel Yang and Sonny Mo

Educating teenagers and young adults about financial matters early can help them manage their finances and save for the future more effectively, as well as avoid any potential pitfalls.

Fortunately, a plethora of fintechs have spotted this glaring knowledge gap and have decided to do something about it. One of these, Bloom, has launched in the US and is giving teens the tools and skills to become financially literate.

The Bloom team is a multi-generational group of fintech operators and builders. Its three co-founders are Allan Maman, Sonny Mo and Samuel Yang. Its investors include Y Combinator and a former US 2020 presidential candidate.

“More than 50% of Americans today still do not own any piece of the American economy in the form of equities. It’s very clear that this must change,” Maman tells FinTech Futures.

Children, children, future, future

Bloom enables teenagers to start building wealth by investing in the stock market and learning about finances. Its vision is to have every teenager start building wealth in a safe and educational way.

“There is a massive underserved gap where teens aren’t being financially educated in schools, and they often go on to make financially poor decisions in investing, student loans and credit,” says Maman.

The app enables teens to start investing with as little as $1 through Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) custodial accounts — created under state law to hold gifts or transfers that a minor has received and are managed by a custodian.

“To guide our audience towards financially healthy behaviours, we also offer more than 18 interactive education modules and quizzes, which teach concepts like why diversification is important and what an ETF is,” Maman says.

Down with the kids

Teens are becoming more and more astute when it comes to marketing guff and spin. Despite being marketers’ most coveted demographic, they have a nose for when they are being sold to. Getting them on board, while a sound strategy, could be difficult.

While Bloom has partnered with edtech Juni Learning and youth organisation VFiles to sponsor some teen accounts for investing and education, for example, Maman thinks the best marketing comes from the product itself.

“We believe that we have built a product that both teens and parents love and can’t stop talking about — word of mouth is our strongest avenue of marketing.”

Additionally, Bloom has partnered with several non-profit organisations that are also working towards educating the next generation.

Maman is no stranger to growing awareness of a product or brand. He has a storied background, working for US Democratic presidential candidates Andrew Yang and Michael Bloomberg, growing their online following and bringing in donations.

In charge of viral growth marketing for the Andrew Yang 2020 presidential campaign, Maman’s team was responsible for netting the campaign $1.4 million.

Financial wellbeing 101

Bloom covers a large majority of the financial literacy basics, and more resources are added every week. For example, Bloom currently has modules such as: “Why invest in stocks?”, “What is a stock?”, “Diversification” and “Budgeting for your future”.

Bloom’s vision is to have every teenager start building wealth

The content orients Bloom’s learners towards financially healthy habits. “For instance, we strongly discourage day trading or gambling and encourage diversification and long-term investing,” Maman says.

The ramifications of a financially undereducated population, particularly younger generations, manifest in all sorts of ways, leading to all manner of social and economic ills.

Predatory loans and mountains of debt lurk in a society in which spending is king. Even when you don’t necessarily have the money in your bank account.

But it’s not just about avoiding pitfalls. Opportunities to save and build wealth may also be missed by those who are simply not aware of them. Interest, savings and responsible investing can lead to returns if people start early and are sensible with their hard-earned money.

Albert Einstein was reported to have said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

“We think that teens having ownership gives them a great opportunity to learn especially because existing financial content is often confusing and dry for this audience. We also believe that starting early and taking advantage of compound interest in growing wealth is critical,” Maman says.

In an era of inflation and economic uncertainty, one of society’s most pressing needs is providing an easy and early way for the next generation to own assets and become financially literate.

Bank of mum and dad

Certainly, Bloom has swooped in where the state has left a vacuum. But parents, too, surely have some skin in this game.

“As a parent, if you believe in educating your children, it’s become ever crucial that you incorporate financial education into the dinner conversations,” Maman says.

The question of just how much responsibility parents have in teaching the basics of financial literacy is up for debate, and there are of course challenges. “We’ve met parents who are too busy with their day jobs trying to make ends meet. Too many times, we’ve talked to fathers and mothers who have not had the financial education exposure themselves,” adds Maman.

In order to break this cycle, parents, as well as their concerns and knowledge gaps, are built into the Bloom experience. Parents can monitor their children’s education journey and learn alongside them. “This relationship has led to a lot of fruitful conversations around financial concepts across the dinner table, and we want parents to support their teen in their financial journey,” Maman says.

Regarding investing, Bloom offers granular parental controls to ensure safety. As an example, parents can allow teens to only purchase ETFs or buy stocks with low beta values. They can also review every transaction and order before execution and have comprehensive control over the experience.

One brick at a time

The financial habits that you form as a teenager often stick with you for the long run. Orienting the next generation of Americans towards healthier financial habits by encouraging them to start building wealth early and to learn about their finances is the first step towards changing the financial health of America.

“We believe that teens are at the age where they start to become financially aware. They learn that college is expensive and they might have to take out student loans or apply to scholarships. They get their first paycheque from a summer job and start imagining what their dream careers might look like,” Maman says.

In a society that is financially healthier, teens would be more aware and more in control of their financial future. That would ripple out to the rest of society, which might mean lower debt levels or more diversification of personal assets, for example, on both an individual and macro level.

A teen is more willing to take initiative and educate themselves when they have skin in the game, whether that’s having $20 in the S&P or $1 worth of individual stocks in their own wallets. “It’s crucial that they have ownership so that they can learn, and we are at the very early steps of this movement,” concludes Maman.