Prepaid and the Next-Generation of Budgeting Tools
By i2c inc.
Read Time : 05 Min
Today is the start of Financial Literacy Month in the US, and as our last post indicates, there are still many Americans struggling with their finances. As such, the need for budgeting tools that actually help people stay on a sound financial path is more important than ever. This is why we partnered with Gx, a global research firm, and consultancy, to examine budgeting in-depth and identify areas where tools, such as prepaid cards and emerging budgeting technologies, can help meet consumers’ budgeting needs. We are releasing the paper, written by business professor and consumer finance researcher Dan Horne, today. You can download it for free here.
Last September, i2c CEO Amir Wain, contributed a couple of posts about how the financial services industry has failed to help consumers manage their money responsibly and why more must be done by the prepaid industry to innovate in this field. You can read his posts here and here. Then last month, the Center for Financial Services Innovation (CFSI) released a Prepaid Industry Scorecard in which they called for prepaid cards to do a better job of making useful financial tools, such as budgeting tools, accessible to prepaid cardholders. And consumers do indeed need help. According to the National Foundation for Credit Counseling (NFCC)’s Financial Literacy Survey, released today, 61% of Americans admit to not keeping a budget. I wonder if it’s because they lack the tools to do it successfully?
The paper Dan developed takes a look at the underlying reasons why consumers choose to budget and the challenges encountered in the budgeting process. By examining this, it becomes clear what kind of solutions are effective.
Dan says, “In a promotion-driven economy, there are always strong impulses to make the kind of unplanned purchases that derail the best intentions of consumers,” he says. “Prepaid cards by their very nature train people to spend only what they have. Features of these cards, such as specific spending purses, text alerts, and consumer-appointed financial buddies, provide additional proactive assistance to help consumers stay on a sound financial path.”
We hope the financial services industry can use this paper to help build out their product offerings to include tools for successful budgeting, such as prepaid cards and emerging budgeting technologies. We’ll be blogging on this topic again next week, and throughout Financial Literacy Month. If you have any questions for Dan or are interested in hearing our perspective on other aspects of financial literacy, please post a comment. This is a topic we as an organization are passionate about, so we’d love to hear from you!
