When Vishwajit Pureti, Pallavi Tipparaju and Ashish Singh graduated, they faced problems not uncommon to young professionals – they didn’t know how to manage money, how EMIs worked, how they could save, the different financial options available and so on.
“We ended up making decisions without any background knowledge. Everyone needs to save, but no one is taught how to do it in school,” Vishwajit tells TNM. The trio then decided to change that.
In a bid to help make the next generation more financially literate, the techies founded Pencilton in Hyderabad in 2017, a platform for children to learn money management and be more financially responsible. While they registered the company in 2017, they came on board full time last year.
One may wonder – why children? It was in line with former RBI governor Raghuram Rajan's view that financial literacy education needs to be included for school children, says Vishwajit. "If we want to solve this problem, we start with young children. You just need to give them a push and they will learn it for the long run,” Vishwajit says.
And Pencilton, which is also part of T-Hub's Lab32 program, is doing that by replacing traditional piggy banks with their platform. On Pencilton, children can learn finance management using pocket money that parents give them. “Most kids get pocket money. Parents also give them piggy banks to save money. We are just making it more efficient,” Vishwajit says.
(L-R) Vishwajit, Pallavi and Ashish
Over the last six months, Pencilton did extensive research and pilots with various schools to discern how they could teach kids these concepts in an age-appropriate manner. Armed with those insights, the company wants to teach children two things: money management and personal finance.
While personal finance may sound complicated even for some grownups, the idea is to teach kids the very basics of financial discipline – how they can save, where they can put their money, and so on. The startup is developing an app where these will be taught in a gamified manner through tasks and challenges. Parents too, can create saving goals for their children.
“Say a kid wants to buy a cricket bat. The parent can create a saving goal of maybe Rs 500. And when the kid reaches that goal, the parent can additionally match the amount and buy them the bat,” Vishwajit explains.
The Pencilton Card
Pencilton has come up with a pre-paid card that can be issued to children. Parents can disburse a child’s monthly allowance by just loading the card via Pencilton’s app. The idea here is to teach children money management on an everyday basis through real-life situations.
Children can use this Visa-powered card for withdrawals and daily transactions. This also gives children an early introduction to using debit cards and banking systems. However, Vishwajit says that it is a restricted card that does not allow children to buy things like alcohol.
For parents, Pencilton provides insights into their children’s spending habits with a monthly report based on how the card is used. Pencilton claims that a child’s privacy will be protected where a transaction-by-transaction breakup of the child’s expenditure will not be shown; the insights will come in categories such as spending, savings, impulse purchases and planned purchases.
“This report is built with algorithms that use details of transactions made on the child’s card, to come up with unique behavioural analysis of the child’s spending habits. We then also tell the kids if they need to be saving more or even saving less,” Vishwajit adds.
What the homepage of the parent version of the app will look like
Since issuing a card requires a banking license, Pencilton is in talks with a few top banks in India to partner with.
“In fact, I believe that banks stand to gain more. While they have license and we have cards, we are giving banks potential customers since these children will eventually have to open bank accounts,” Vishwajit says.
While the card has not officially been launched yet, Pencilton has opened pre-bookings for parents to register for the card. Vishwajit says that they already have requests for 250 cards within the family and friends circle and over 250 more requests through the website.
Pencilton will earn revenue by charging parents a subscription fee for the app, its gamified modules and insights. It also covers the one-time cost of the pre-paid card.
Pencilton’s vision is to help kids across Indian metros manage their pocket money. It hopes to expand to other countries as well.
“Pocket money given to kids amounts to over $10 billion just in India. That is a huge untapped potential that we want to tap by teaching kids about money. We want to make piggy banks redundant by becoming every kid’s piggy bank,” Vishwajit says.