Family

Setting The Next Generation Up for Success

Tanya van Court

A Conversation with Goalsetter Founder, Tanya van Court

What or who inspired you to create Goalsetter?

My daughter, Gabrielle, was the inspiration. It was her 8th birthday and I knew she would be likely get $400 worth of plastic "stuff" that she didn't want, need or use. That's when I realized that as parents, aunts, uncles – the "village" surrounding kids – we are falling short of helping them to understand the true value of money, and are instead teaching them the wrong values - values of consumerism and excess. As I talked to other parents, there was a chorus of assent: gift-giving was a wasteful experience for givers and receivers alike, kids have too much stuff, savings accounts are almost non-existent, and kids and parents both struggle with financial literacy. We resolved to create a savings platform that is fun for kids, good for families, and lets kids grow their savings while simultaneously growing their financial fluency.

What are some of the pivotal steps you took or decisions you made to turn Goalsetter from an idea into an actual company?

The first - and most important - step was to scour the country talking to parents and kids from all backgrounds. We wanted to create a platform that appeals to all kids, and understanding the needs of families at every end of the socio-economic spectrum helped us develop a product that resonates with families of all shapes and sizes. The second major step was to partner with a back-end bank that could provide the security and FDIC-insured accounts that parents needed to feel comfortable saving their money on our platform. Finally, applying to Morgan Stanley's Innovation Lab, an intensive accelerator design to help build and scale startups, was crucial. It helped us to get access to a world of financial connections, knowledge and experience that has helped us to evolve our product vision and simultaneously accelerate the trajectory of our company.

Why is saving at such a young age important?

Research shows that kids who have savings accounts in their name are not only 6 times more likely to go to college, but are also 4 times more likely to own stocks by the time they are young adults. While researchers don't know why, it is clear that something about having a savings account in their own name significantly impacts the way that kids think about themselves and think about money. Those early experiences can influence their financial habits for the rest of their lives.

What are some examples of popular goals kids are saving for on Goalsetter?

Kids save for everything from experiences that they are excited about to high-price items that their parents aren't willing to spring for! We see young kids saving for new bikes, iPads, and trip to Disney. Older kids save for smart phones, new computers and concert tickets. All kids save for college, but that's likely because we make "education" one of the first goals that is added to every kid's profile, and their parents keep it there!

What lesson(s) do you wish every parent taught their child about personal finance?

I wish every parent taught their kid about compound interest. It's actually a super easy concept to teach, and can be done with pennies on a chess or checkers board. If you start with one penny on square one, and double the number of pennies every time you move one square across the board, you quickly realize the power of compounding your money. If kids realized that they could make money in their sleep, and it could grow astronomically, they would absolutely be more excited about saving than spending money.

How does Goalsetter make saving fun?

Because my past role was leading digital at Nickelodeon, I naturally think about how to make every interaction with money or financial terms something that a kid would enjoy. Do kids want to receive money for their birthday in a simple online money transfer, or do they want a fun digital card with confetti, a video with their friends singing or a funny gif? Definitely the latter. Do kids want to read a long definition about "compound interest" from a Harvard MBA textbook, or do they want to take a fun quiz with a meme from Tupac Shakur that defines compound interest using his lyric, "I'm trying to make a dollar out of fifteen cents." Likely, the latter. So our GoalCards and our "Know your Money" financial urban dictionary are just two of the ways that we make money engaging and fun for kids of all ages (and parents too!)

Do you have any other tips to help kids build healthy financial habits?

I'm full of those!

  • Give kids a budget. Whether you give them a spending budget on vacation, or a budget for grocery shopping, teaching them to ask about prices, look at price tags, and become a discerning spender is a habit that will serve them well throughout their lives.

  • Teach asset allocation early. While asset allocation sounds scary, the core principle of making kids split their earnings and monetary gifts into 3 buckets: saving, sharing and spending, will teach them not to spend every dime in their pocket, while reinforcing positive values about the power of money to help others and save for future dreams.

  • Match money they save, but not money that they spend. Reward your kid for any dollars they choose to save with a bonus for every dollar saved. The interest earned on savings accounts is what makes saving fun for all of us.

  • Start early. Don't think your kid has to be 13 to learn good money habits. Research says that kids' money habits are cemented by the time they are 7 years old, so start early.

How does Goalsetter differ from other, more traditional savings account options for kids like 529 plans?

Goalsetter is all about kids and families, so every feature we develop is created through the lens of the kid, the mom, the dad, and even the doting aunt or grandparent. Other financial institutions just create "mini" versions of grown-up accounts for kids. We make the savings account exciting for kids because they're saving for something they really care about, but we also engage the entire family in supporting the kid's goals. We engage parents by letting them set up Auto-Save or Round-ups (they can round up their debit card purchases to the nearest $1 or $2 and save the change towards their kids' goals.) We engage other family members by letting them give kids GoalCards instead of Gift Cards on birthdays, holidays and other gift-giving moments, because while gift cards tell a kid, "I can't wait to see what you buy next", GoalCards tell a kid "I can't wait to see what you do next!" We engage kids by enabling them to earn money with our allowance feature, and apply that money to their goals. So Goalsetter is becoming the centerpiece of a kid's financial life, and helping them to save their money for what's important - no matter where that money is coming from.

How can parents or other family members support kids with Goalsetter?

Parents can help support kids in 4 ways:

  • They can set up auto-save to give a bit every week or every month to their kids' goals. This is a great way to support bigger goals - like summer camp or college - over time.

  • Parents can also set up Round-Ups, which lets them round-up their debit card purchases and "save the change" towards their kids' goals.

  • Parents can set up Goalsetter Allowance, and give kids allowance that can be collected in cash or saved towards the kid's goal (or both.)

  • Finally, parents can send out their kid's Goalsetter profile to family and friends on birthdays and holidays and encourage them to support their kid's goals with GoalCards instead of buying them more consumer goods.

How does Goalsetter give back and why is this so important to you?

Goalsetter gives 5% of our transaction fees back to kids-related charities. This is extraordinarily important to me personally because so many kids lack the basics that all kids deserve for a happy childhood - clean water, ample food, a quality education, healthcare. So while I understand how important it is for all kids to be financially fluent, kids who don't have their basic needs met today can't begin to think about their tomorrow. We need to resolve to give all kids a chance to have the bright future that every single kid deserves.

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Investors should consider many factors before deciding which 529 plan is appropriate. Some of these factors include: the Plan's investment options and the historical investment performance of these options, the Plan's flexibility and features, the reputation and expertise of the Plan's investment manager, Plan contribution limits and the federal and state tax benefits associated with an investment in the Plan. Some states, for example, offer favorable tax treatment and other benefits to their residents only if they invest in the state's own Qualified Tuition Program. Investors should determine their home state's tax treatment of 529 plans when considering whether to choose an in-state or out-of-state plan. Investors should consult with their tax or legal advisor before investing in any 529 Plan or contact their state tax division for more information. Morgan Stanley Smith Barney LLC does not provide tax and/or legal advice. Investors should review a Program Disclosure Statement, which contains more information on investment options, risk factors, fees and expenses and possible tax consequences.

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