In a recent interview with Learnbonds.com Status Money chief executive Majd Maksad has pointed out that millennials are not equipped to make key financial decisions. Majd suggested the way forward to tackling this problem in the United States.
During the interview, Majd gave his projection regarding sectors that are likely to recover immediately after the coronavirus pandemic. He explained why the travel sector might be grounded for long after the pandemic.
The chief executive officer further explained why it is important for an average person to understand how other people spend their money.
Do you believe its time to add financial education to the normal school curriculum? If that is the case what measures should stakeholders put in place to attain this goal?
A dismal 17% of millennials in the US have basic financial literacy. This means that they’re not equipped to make fundamental financial decisions about how to borrow, spend, save, and invest their money. This failing is not theirs, however – it’s the result of the United States failing to introduce financial education into its school curriculums. Absent any political leadership on this issue, I believe that parents must be the front line in the effort to introduce personal finance into their childrens’ education – both at home and at their schools.
In the wake of the Coronavirus pandemic, markets have crushed and it has presented an opportunity to invest and gain later. What should people look out for before investing in stocks that have plunged?
I am not a professional advisor and may not be qualified to provide investment advice. Personally, I choose to avoid stock picking in favor of index funds and ETFs.
Status Money has an active page where it updates users about the economic impact of Coronavirus. From the current trend, which businesses and sectors are bound to bounce back sooner after the pandemic is over?
The problem with data is that it’s always looking backward and many times a poor predictor of the future. The ongoing COVID-19 pandemic has financially hurt most people and businesses — with the travel and hospitality industry seeing a massive 69% drop in spending. While some sectors such as real estate may recover after the pandemic, I believe many people will choose to continue to avoid unnecessary travel, restaurants, and sporting events for months (maybe years) to come.
Why do you think it is important for an average person to know how another spends his/her money?
Like it or not, we’re social creatures. We observe and learn from each other in every facet of our lives – sometimes to our detriment. Since talking about money with friends is off-limits, most of us scroll through their social media and assume that their spendthrift behavior is normal. So we end up overspending ourselves. This is why Status Money’s peer comparisons are important. They provide each person with an accurate picture of how similar people are actually spending, saving, and investing their money. A recent study by professors at the University of Chicago showed that Status Money users that found out they were spending more than their peers reduced their spending by 26%!
Status Money collects financial information from clients, what guarantees are there to keep this data safe?
Status Money uses industry-leading encryption and works with several leading cybersecurity companies to ensure that user data is always secure. In fact, a leading security rating agency found Status Money to be more secure than most US banks.
American household debt has hit $13.86 trillion. What measures should households put in place to manage this debt?
The most important thing anyone can do to get out of debt is to stop accumulating it. Status Money tackles this problem by providing you with a diagnostic of your spending, income, assets, and debts compared with people like you. Based on that information, you can easily see your problem areas and correct course. I for one found out that my wife and I spent almost double what our peers in New York City spent at restaurants. As a result, we decided to start cooking more often – this small change boosted our monthly savings by 5%.
What informed your decision to incorporate the social networking aspect while developing the Status Money app?
99% of Americans don’t have access to a financial advisor. Worse still, most of us can’t talk about money with our friends and family. So it’s safe to say that many of us are winging it when it comes to some of the most important financial decisions of our lives. We created Status Money’s social feed to give everyone the ability to get financial advice when they need it – and for free!
Can you comment on the number Status Money users? How many users do you plan to have by the end of 2020?
Status Money currently has more than 300,000 users. We can’t disclose future projections.
What is the Status Money product roadmap for the coming months?
Status Money’s Premium membership is launching soon. It will enable members to access more advanced financial management features and unlock more cash rewards.
Do you have plans of expanding outside the United States? If this is the case where is your next target market?
We are currently focused on the United States. We’ll strategically explore international opportunities next year.
Thank you, Majd, for the conversation!