The app is based on the Swedish ethic of equality in personal finance

Financial inequality has become a major factor in America’s growing social divide. State and local governments have gone a long way to address the problem by raising the minimum wage and requiring personal finance education in high schools. In fact, Florida became the 11th state to require personal finance courses as part of high school graduation criteria. Twenty-six other states have a combined 54 personal financial education bills pending.

Of course, financial education goes hand in hand with living wages. Therefore, teaching the next generation of voters to budget, build savings, invest, achieve financial goals, and manage debt is an essential part of creating a more equitable society. US Treasury Secretary Janet Yellen told members of the federal government’s Commission on Financial Literacy and Education last May that, while not a panacea, “…education on how to manage personal finance can have a positive and lasting impact on people’s lives.

However, it takes the US a while to realize this. Sweden recognized the problem as early as 2011 when the country’s National Agency for Education introduced a personal finance education curriculum into the school system. The fintech sector saw the financial education gap extend to working adults. To that end, in 2012 George Friedman founded the Swedish startup Qapital, a personal finance management (PFM) app. Two years later, the company launched in the US, where it now has two headquarters. To date, Qapital has helped its users save almost $3 billion in aggregate.

Katherine Salisbury, co-founder of Qapital and a Swedish citizen, points out that PFM applications from US fintech companies are similar to payday loans with the primary intention of profiting from users. “In Sweden, there is a fundamental belief that people should be able to live a financially stress-free life in order to live and prosper,” she said. “Qapital questions why it is so difficult for 80 percent of Americans to get through the day without severe financial stress and we want to fix that, as the government and society do not. We want to handle things privately for our clients that the government handles for people in Sweden.”

Salisbury cites retirement as an example. Users typically turn to Qapital when they are about to embark on a life milestone that requires some financial planning, such as starting a new job, getting married, having a baby, buying a home, or even starting a freelancing career.

The app was designed to help users achieve specific financial goals by helping them essentially reallocate disposable income in a way where they don’t feel like they’re demeaning their lifestyle. Salisbury describes the process as helping users to modify some behaviors and habits to reach their goals effortlessly.

“Our users are looking for a simple way to take control of their money that doesn’t leave them overwhelmed or deprived,” Salisbury said. “They want a system that helps them make good financial decisions effortlessly.”

The app also offers a budget function, as it goes hand in hand with the concept of moderating spending habits, as well as an automatic investment function.

Qapital users have also found another purpose for the app: to teach their children about personal finance, and in particular, setting goals and making trade-offs to reach their financial goals. Qapital now also has a joint finance feature, a “Qapital Dream Team”, for couples who share a common aspiration. According to Salisbury, the company is now considering adding debit cards for children that would be linked to a financial account with their parents. But even without these features, parents still open accounts with the intention of teaching their children about money management to teach them how to save for purchases like an Xbox or an iPhone.

The concept of debit cards for kids is certainly not new, as major US financial institutions like Chase and CapitalOne already offer them. But a new Qapital feature designed specifically for kids would certainly fall in line with the company’s Swedish ethos.

At Sweden’s Global Money Week 2021, the country’s financial supervisory authority Finansinspektionen joined forces with The Economy Museum, the Swedish Bankers Association and seven other financial institutions to launch “Pengalabbet”, or The Money Laboratory, an online educational game to teach children about everyday economics. The Swedish Bankers Association also created a money quiz and several online lectures for high school students.

Hopefully, Janice Yellen and the US Committee on Financial Literacy and Education are taking note of these additional educational tools.

Image Credit: Tirachard Kumtanom via Pexels

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