A recent study on young Americans shows that those who use their smartphones for payment transactions are at a higher risk of mismanaging their money.
According to a report in the Wall Street Journal, AnnaMaria Lusardi, director of the Global Financial Literacy Excellence Center at George Washington University in Washington DC, and two colleagues researched young people’s use of fintech on their money habits. The results showed that their subjects, specifically millennials, who typically swiped their smartphones over a sensor to effect a payment at shops, filling stations or restaurants, were at a higher risk of getting into overdraft, missing credit card payments, dipping into their savings and taking out short-term personal loans.
These findings, says Lusardi, show how important it is for young people to understand how to manage their money, and the consequences of money mismanagement.
“Young people today have grown up using technology and are technology-savvy,” says Lusardi. “I want them to know that it is not just technology but the smart use of technology that matters. In other words, you need to be financially literate to make the best use of technology.
“Our findings should not be interpreted to say that fintech causes millennials to manage personal finances poorly. It could simply be that those who use fintech are also those who do not handle their finances well.
“In a digital economy,” says Lusardi, “we need new forms of financial education.”