Gen Alpha, those born between 2010 and 2024, are driving a significant shift towards digital payments. A recent report by financial technology company GoHenry revealed that Gen Alpha’s spending reached $126.2 million between 2023 and 2024. A substantial portion of this spending was allocated to online services, including food delivery and social media purchases.
Louise Hill, founder of GoHenry, commented on the trend. She stated that “convenience and speed have become the norm” for Gen Alpha, who are accustomed to instantaneous availability. This has resulted in behaviors that make it challenging for parents to instill traditional money-saving skills.
The accessibility of easy-to-use financial products further complicates the task. These products include credit cards, buy-now-pay-later options, and contactless payments. Hill emphasizes the importance of understanding the value of money.
She suggests making money tangible for children by giving them regular pocket money in the form of physical cash. This helps them grasp the concept of money management. For teenagers, she proposes a “pizza budgeting” method.
This method visualizes money as a pizza, illustrating how essential expenses, such as rent and bills, reduce the amount available for discretionary spending.
Gen Alpha’s digital payment habits
Another key aspect of raising financially literate children involves including them in financial conversations.
Hill believes it’s beneficial to educate children about household finances in a stress-free manner. For instance, parents can involve their children in preparing a homemade meal instead of ordering a takeaway. This can be used to discuss cost-saving measures.
A separate report by Mastercard highlighted that Gen Alpha is a significant driver of digital payment adoption in the Asia-Pacific region. Although digital wallets are prevalent among this generation, 48% still use credit cards. Sandeep Malhotra, Mastercard’s Vice President for Core Payments in the APAC region, observed that cash usage is minimal among Gen Alpha.
Meanwhile, digital adoption is at its peak. The report also noted their preference for innovative financial tools. These tools include those that leverage artificial intelligence and utilize gamified finance.
There is also a growing interest in voice interfaces and decentralized finance (DeFi). In conclusion, fostering financial literacy in Gen Alpha requires making money tangible and involving children in financial discussions. Equipping them with appropriate tools and education is also important.
These steps can help nurture a financially savvy generation well-prepared for a digital-first economy.
