The FamZoo Blog

Spend Money Like a Pop Star...Or Not: FamZoo's FinovateSpring 2013 Demo

2013-05-21T23:53:00.000-07:00

Last week, we unveiled our new family pack of prepaid cards at FinovateSpring 2013, the demo-focused conference for innovative financial and banking technology. We were honored and delighted to be voted by the audience as one of 5 Best of Show recipients out of 72 presenting companies.

Woot!

In case you didn’t get a chance to catch our demo, or you just want to examine it more closely (because you were busy sending snarky tweets, or you tuned out as soon as you saw the Biebs, or you just plain nodded off), I’m posting a rough transcript below. I say “rough” because I don’t memorize my scripts word-for-word for two reasons: 1) I’m completely incapable of doing so, and 2) it tends to kill the mood.

Note: The videos of the presentations have now been posted by Finovate, and ours is here. You can see to what degree I winged it relative to the script below.

[Screens come on with Bill watching the following video starting at the 0:40 mark for 13 seconds until pausing at 0:53 mark.]

[Looks up at audience sheepishly.]

Oh, hey. I was just checking out the Biebs. Catchy lyrics, huh?

I got money in my hands that I’d really like to blow
Swag, swag, swag,
on you.

OK, I’m not even totally sure I know what that means, but as a father of 5 (4 teens so far), I think I have a pretty good inkling. Did you know that almost 250 million kids have watched that video? Amazing, if not scary.

But I’m not here to talk about teen pop stars today. I’m here to talk to you about teaching kids good money habits. How do parents do that?

Well, I think part of it is having a solid financial role model. Someone who reinforces good, responsible money behaviors, like moderation and delayed gratification.

[Wink wink nudge nudge gesture to video.]

I think another part is lots of hands-on practice. That’s key to mastering any skill.

So, what if we could roll those two things together into a custom, educational banking experience designed specifically for kids? A place where our kids could repeatedly practice handling real money while immersed in the positive imagery of a responsible role model. It would be like financial training wheels for adult banking. Wouldn’t that be awesome?

Well that’s exactly what FamZoo lets me do. I can set up a custom, private, virtual banking system for my kids.

For example. check out what I’ve set up for my teenage son, Payton, in FamZoo.

[Expands browser window to reveal the following account screen.]

Here I am signed into my very own private virtual family bank — the “Dwight Family Bank”. You can see all our family members over here in the sidebar. I’m signed in as me, the dad, so I can see all my kids’ accounts as well as my own. When kids sign in, they just see their own accounts.

By the way, notice this lower sidebar area, the upper banners, and the branding. That can all be customized by a specific partner — like a bank or a credit union — using our Partner Edition offering.

More importantly, individual families can customize the experience for their kids based on their own unique values. So, I’ve created a spending account for Payton, and called it “Spend like a pop star”. We’re looking at the online view of that account’s transaction history right here.

FamZoo lets me customize the account description for my son, so I’ve done that and have embedded a cool video featuring our esteemed teen pop star money mentor. I even gave my son a prepaid card featuring that very same financial role model. That way, whenever he’s is thinking about money, he’ll be encouraged to emulate the behaviors of a teen pop star.

Let’s look at some of his transactions to see how it’s going so far.

I figure kids love their independence, so I let him loose with his card and a $1,000 a week allowance for babes, bling, or whatever. I just get out of the way. Kids can’t stand it when parents interfere in their lives — they just want to be left alone with their peers. Is that so wrong?

You can see the strategy is really paying off. Everything here looks good, except for perhaps this purchase of an LA Kings tattoo — just like the Biebs has. That’s really disturbing because I’m a big, big Sharks hockey fan...

[Pauses. Walks out to side of podium.]

OK, before you go sending any snarky tweets, let me just say that this is obviously absurd. I mean, no parent wants their kid emulating a teen pop star when interacting with money. Right?

So, of course, I’m only kidding here. Well, mostly kidding... I did actually mean what I said about:

having a good money mentor,
getting lots of hands on practice,
having a banking experience designed specifically for kids,
and using prepaid cards as a stepping stone to checking accounts and credit cards.

I just wouldn’t structure it this way.

So, let me show you the custom banking experience that I really set up for my son, and that we’ve been using together for the last 6 months.

[Switches over to Son’s Prepaid Card account shown below.]

One of the first things you’ll notice: this isn’t an isolated teen prepaid card. We’ve built something really cool and unique using the API to TransCard’s prepaid card platform. Payton’s card is part of a group — or a family pack — of prepaid cards that we use together. You can see my card on the left here. I load my card up periodically from an outside source through a bank transfer, or a MoneyPack, or, if I want to load it for free, I can use Dwolla.

Then I use my card as the funding source for a whole bunch of micro-transfers to my son — payments for allowance, chores, reimbursements, etc. And, sometimes, money even flows in the other direction from my son’s card to my card — for penalties or bill payments when he picks up his share of expenses like his cell phone data plan. The great thing is that all of those micro-payments back and forth are card-to-card transfers within TransCard’s platform. That means they’re all immediate and free.

Before we walk through some recent transactions on my son’s card, let’s step back and look at his financial big picture by clicking on the “diagram” link in the left sidebar.

[Switches to account diagram for son.]

Now you can see how we’ve really set things up in our virtual family bank for Payton. He gets a modest allowance (not $1,000 per week!), and 80% of it feeds into his spending card. The remaining 20% is split between long term saving and charitable giving.

You can see the balance on his card has been trending up. Perhaps because of the 0.2% compound interest I’m paying him each week as a reward for NOT spending. Remember, that interest is defined and paid by me through an automatic card-to-card transfer which is immediate and free of fees.

You can also see that he’s saving for a MacBook Pro as well, so that helps put a damper on the miscellaneous spending too.

As for money coming out, he’s got some regular automatic monthly bills to pay his parents for the iPhone data plan and the phone insurance. These are also free and immediate card-to-card transfers, but in the opposite direction. So, he needs to plan ahead to make sure he’s got the balance to cover those expenses at the end of each month.

Now, let’s go back and take a look at Payton’s transactions to see how this has all been playing out recently. I’m going to highlight 9 transactions.

[Focuses attention on first transaction.]

I recently shot him a $5 bonus with a text message from my cell phone for memorizing all the U.S. President’s names — an extra credit exercise for his History class. I was very impressed by that, since I can barely remember the names of my 5 kids.

[Focuses attention on second transaction.]

Next, you can see that his allowance was automatically delivered by FamZoo, with 80% of the total going to this spending card. That’s an automatic transfer from my funding card that happens each week.

[Focuses attention on third transaction.]

Then you can see a typical teen purchase for some McDonald’s fast food. Since the FamZoo cards are MasterCard® prepaid debit cards, they’re accepted pretty much everywhere — both online and in stores. That’s really crucial when it comes to accommodating typical teen spending destinations.

Notice that I can drill down on the detail by clicking on the little “settled” icon to check out what time the purchase was authorized. Good. Not during class hours!

[Focuses attention on fourth transaction.]

Next, you can see the automatically delivered weekly interest payment that I’m paying my son to encourage him to maintain a healthy balance on his card and generally spend less. It’s a parent defined savings reward.

[Focuses attention on fifth transaction.]

Here’s a really common scenario: I’m reimbursing Payton for a couple items he bought for a school project. You can see the two purchases just below. OK, at least, he said that iTunes purchase was related to his English presentation. At minimum, it was a creative story, so I’m rolling with it. To reimburse him, I just click on the credit link to enter the transaction description and amount. Behind the scenes, the amount is transferred immediately from my card to his.

[Focuses attention on sixth transaction.]

Here are the automatic debits for the “child bill pay” that we discussed earlier — one for Payton’s monthly share of the iPhone data plan and another for the monthly installment of his cell phone insurance. He needs to plan ahead a bit to make sure he has enough on his card to cover these payments to me at the end of each month.

[Focuses attention on seventh transaction.]

This next transaction highlights our integrated chore chart capability. You can set up a checklist that automatically credits one or more accounts whenever an item is checked off. Or, if you prefer, you can set up a “Chore Fail” chart like we do in our family to ding your kids when they blow off their chores. You can see Payton got dinged a buck here for not making his bed. Here’s a peek at our checklist:

[Navigates to associated chore checklist.]

You can group a set of single and/or repeating items onto a checklist, and each item can optionally have associated rewards and/or penalties.

[Navigates back to transactions. Scrolls back in time to page 2. Focuses attention on eighth transaction.]

Here’s something cool. Each of the cards has an associated account and routing number pair, so you can set up direct deposit right to a family pack card. This can be really handy. For example, I wanted my son to learn how to do his taxes online with TurboTax. This isn’t your most compelling teen activity! But, when I told him he could get a nice refund for his summer job and have it delivered directly to his card, he quickly changed his tune!

[Focuses attention on ninth transaction.]

And, finally, I saved the coolest transaction for last. My son registered for his AP exam online with his card, and I needed to reimburse him for the $110.00 fee. Unfortunately, when I tried to do so, I was short of funds on my card by $89.18. Uh oh. Look, I missed a subsequent automatic interest payment as well.

No worries! FamZoo detects whenever I run short of funds on payments to my kids and automatically creates and tracks the appropriate IOU amounts. As soon as I get around to reloading my card again, FamZoo automatically repays any IOUs that I have outstanding to my kids, like it did here after I reloaded my funding card with a transfer from Wells Fargo.

You can see what it looks like over on my prepaid card. I can jump to the related transaction on my card by clicking on this little card icon.

[Jumps to related transaction on funding card.]

Here, you can see the load from Wells Fargo followed immediately by the automatic IOU repayment to my son.

The bottom line: you don’t have to be the perfect financial role model to use FamZoo effectively with your kids. You just have to care a little bit more about your own kids’ money habits than your typical teen pop star does. We’ll help you with the rest.

So that’s what our new offering is all about: a customizable family banking experience built on a group of prepaid card accounts that parents use together with their kids to teach good money habits in a way that’s consistent with their unique family values. All for one low monthly fee that covers every card in the family.

Multiple cards. One fee. Good money habits. Together.

If you’re a parent, swing by the booth and find out how to get in on our sweet promotional offer for the first 1,000 prepaid card family packs.

If you’re a potential partner, come by and let’s talk about how you can offer virtual family banking as a new product to your own customers. I can show you what I didn’t have time to show here: how easy it is to customize the branding and how to place targeted offers inside the app.

Otherwise, just drop by and grab some FamZoo cartoon stickers. They’re always a hit with any age, and they’re a lot easier to remove than an LA Kings tattoo.

My Finovate Scorecard Winners Plus Snarky Tweet Highlights

2013-05-19T21:40:00.000-07:00

The Finovate conference for spring 2013 just wrapped up in San Francisco, and the audience selected their 5 favorites from a line-up of 72 financial technology innovators. As one of the presenters, I was barred from casting a formal vote, but I did keep an informal grade sheet as I watched my colleagues up on stage. I awarded two grades:

Presentation Grade: How engaging was your presentation? If you can’t hold the audience’s attention, they aren’t going to appreciate your product — no matter how awesome it is. They’ll be too busy reading the back of their eyelids or, worse, sending snarky (but often quite funny) tweets.
Product Grade: How innovative is the product? Products can be innovative in a number of different dimensions, so this is just an overall personal gut feel. Is it a clever new twist on an old problem? Does it break new technical, usability, or capability ground? Is it a bold vision in a potentially emerging market? Perhaps a dramatic simplification of a tedious but important process? Or, a super useful leveraging/mash-up of new platform technology? Maybe it simply fills a real need in a “Doh! Why didn’t I think of that?” kinda way. All valid criteria for a high product grade in my book.

So, without further ado (and for what it’s worth), here are the 15 “double A” demos on my personal Finovate scorecard that garnered top marks for both presentation (first grade) and product (second grade):

Money Desktop (A/A+): Ryan and Matt packed an insane amount of gorgeous, innovative UI sweetness into 7 minutes — expertly choreographed to make it through everything under the buzzer. The new products, Insight and Target, extend MoneyDesktop’s customer facing PFM UI prowess to the back-office of financial service organizations. Now, analysts can create marketing segments based on aggregated PFM user data and create/deliver targeted offers to those segments. MoneyDesktop delivers great cutting edge user experience. See it in action here.
TipRanks (A/A): Uri and Gilad had a comfortable, easy-to-follow delivery, and sported cool T-Shirts to boot (wish I had scored one of those at their booth, darn it!). Their product lets you see the track record of any stock analyst who publishes buy/sell recommendations online — as tweeter Chris Giles put it: “accountability for financial talking heads”. TipRanks cleverly satisfies a need for some and a curiosity for the rest of us.
PayNearMe (A/A): Danny and John delivered a very clever and engaging “sandwich-board” skit (or “anti-demo” as tweeter Brad Leimer put it) in the first half of their presentation to illustrate why and how they enable people to make payments to remote merchants with cash delivered to their local 7-Eleven. They followed it up with a clear online demo of their new white-label offering. PayNearMe is a very innovative application of new technology to an old-school problem.
Lendup (A/A): Sasha kicked off a nice casual, clear delivery by calling out an attendee in the front row who was zoning out. That got (and then maintained) everyone’s attention. If I’m recalling correctly, they also had a gutsy real-time money transfer in the demo that delivered right at the buzzer. Nice (unintended?) tension element. The product helps the underbanked borrow and build credit. It’s a more socially responsible alternative to payday loans that systematically rewards good repayment habits. Not surprisingly, I love that angle given how we feel about teaching kids good money habits.
Kofax (A/A): Anthony and Diane delivered a very clear, straight-ahead demo showing how to capture account on-boarding info like a license or a utility bill using the customer’s mobile phone camera. I enjoyed the mocked up license with the hand-drawn face (it’s the little touches sometimes), and was interested to learn that some licenses have bar-coded info on the back. (They may want to relabel that “Capture Backside” button lest customers start sending them some disturbing pictures!) I could see Kofax being something that would be very handy for verifying young adult cardholders in a FamZoo family pack. The product leverages a now ubiquitous technology (mobile camera) to solve an annoying, tedious, practical problem — manual account verification.
Bright Funds (A/A): Ty and Rutul delivered an engaging, easy-to-follow presentation with a well-executed demo. The mutual fund model meets philanthropy: BrightFund groups non-profits into “funds” associated with high level causes — like poverty, education, and environment. Users can invest in a portfolio of these pre-canned funds as well as design their own funds. This is a cool way to address the problem of donors being overwhelmed by a gazillion philanthropic choices and struggling to perform thoughtful due-diligence on each. It’s a cool, useful new idea with a nice, clean user experience. I also think this would be a great option for FamZoo families introducing their kids to philanthropy.
Better ATM Services (A/A): Todd delivered a very clear, compelling presentation of his company’s thin, durable prepaid cards that can be selected, loaded, activated, and dispensed through ATM machines after installing a minor hardware modification. It’s a cool piggy-backing on top of the staid, ubiquitous technology of ATMs. Someday, I’d love to see FamZoo customers printing out family packs of prepaid cards this way.
Virtual Piggy (A/A-): Jo did a terrific job presenting with a warm, comfortable, logical delivery that easily held audience attention. The product is a new online payment system for parents to set rules around how their kids transact online in a COPPA compliant way. They debuted a slick mobile app for kids under 18 to make parent authorized purchases through their virtual piggy account using just a username and password. The purchase is completed using the parent’s payment mechanism that is linked to the account. Kids can transact online and now in-store using a bar-code. This is a cool forward-looking payment technology that addresses the needs of parents with kids. Naturally, I’m a big fan of this space. As with any new payment technology, the challenge is getting widespread merchant adoption. Ubiquity is a very important requirement for typical teen purchase patterns, so I hope it catches on.
Realty Mogul (A-/A): Jillene had a very unique, serious presentation style — described as "Shatner-esque" by one tweeter. Love it or hate it, it kept the audience dialed in. The product allows accredited investors to buy shares of pre-vetted investment properties through a simple online experience — a very cool new “crowd funding for real estate” idea.
Prestadero (A-/A): Gerardo opened with fun stats about APR rates in Mexico that kept the audience buzzing. The product provides the first peer to peer online lending platform for the Mexican market. This seems like a very big untapped opportunity.
Finect (A-/A-): Jennifer gave a very professional, clear presentation that was easy to follow and understand. Finect provides a social network for financial professionals that meets compliance requirements and shares outward with existing social networks. As Ian tweeted: “a LinkedIn for the investment industry.” The product meets a real (if not annoying) practical need for the financial industry.
Balance Financial (A/A-): Devin delivered a relaxed, clear presentation. The product is a digital work space for finance professionals to interact privately with their clients. I think of it as a Basecamp for the financial advisor industry. This just struck me as a very useful, practical idea with a clean user experience.
Intuit Financial Services (A/A-): Unfortunately, I didn’t write down any specific notes about Gregory’s delivery, but it must have been extremely solid given the “A” I scrawled in the margin of my program. Intuit unveiled their home business support for Mint users including Schedule C categories, splitting of transactions between business and personal expenses, receipt capture, and tax planning. I can’t say it was a hugely inspiring UI next to MoneyDesktop (really tough comparison!), but it was clean, and the product offers a very practical set of new features for the hordes of small business owners out there.
Refundo (A-/A-): As John Waupsh tweeted, Roger gave a “really laid-back” presentation of a “super simple product.” Simple is good, especially when your product is a mobile banking experience targeted at un(der)banked communities. Tax professionals can initiate the accounts to hold their client’s tax refunds. That seems like a smart onboarding/channel strategy. The app comes in Spanish, too. That also seems like a smart play. This strikes me as a very big, important opportunity, and Refundo seems to be tackling it in the right way.
Allied Payment Network (A-/A-): Bringing a little levity to the stage, Ralph and Steve had the crowd chuckling with their demonstration of the first ever bill payment by mind-reading (aka, remembering and executing a recent payment via the “Read Mind” button). But, their real demo was of their mobile picture pay — just point, shoot, and pay a bill with your mobile camera. They also demonstrated payment by voice. I thought Picture Pay was a neat and convenient application of near ubiquitous smart phone technology.

Finally, my honorable mention in the geeky-yet-unique-and-useful product innovation category goes to Quantopian. I thought it was super cool how you can code up your own automated trading algorithm, test it out immediately on historical market data using their backtester, and ultimately deploy it — all from your browser. As a long-time software geek myself, I could really dig that one. I may have to give it a spin. Well, maybe everything but the final deployment step...

And, just to cap it off, here are some of my favorite snarky tweet gems from day 2 (sorry, too amped up before my demo to collect them on day 1). See if you can remember the moment:

I like the idea of @flexscore but not digging the mega-church vibe. If he pulls out snakes I'm out. #finovate
— symigoddess (@symigoddess) May 15, 2013

Finally found my calling. The guy/woman who says nothing but runs the computer at #Finovate. Need a manicure though.
— Jim Marous (@JimMarous) May 15, 2013

Step 2:verbal disclaimer RT @waupsh: Step 1: Start with a huge disclaimer. #finovate
— Gabriel Krajicek (@gmkrajicek) May 15, 2013

Quote of the day! Viola! #finovate
— chad owens (@chadjowens) May 15, 2013

What the heck is he talking about? #finovate
— Kevin Rosengren (@krosengren) May 15, 2013

I had a much easier time understanding the Spanish guy. #Finovate #nerdland
— Chris Giles (@chrisgiles) May 15, 2013

#finovatethis pres is taking a very complicated topic and making it even more complex
— chris krobisch (@ckrobisch) May 15, 2013

All I heard, is jail breaking, hopping, hexadecimal, coding, pseudo coding, and binary code...this is serious business. #finovate
— Tiffani Montez (@tiffanimontez) May 15, 2013

Heavens to Murgatroid!I'm more than a little glad I didn't understand a word Arxan Technologies just said.#finovate
— Scott Hodgins (@VendorDirt) May 15, 2013

O dear God, another authentication demo. Pleaaaseeee no techno babble. My foggy jetlagged head can't take it #finovate
— Greg McAweeney (@GregMcAweeney) May 15, 2013

I looked up expecting to see Bill Clinton presenting #finovate
— symigoddess (@symigoddess) May 15, 2013

A script on a tablet is still a script... #finovate
— JP Nicols (@JPNicols) May 15, 2013

Did I miss your favorite demo or snarky tweet? Share it in the comments.

How Much Allowance Should You Pay Your Teenager?

2013-05-09T19:11:00.000-07:00

I bumped into an old friend this week at Starbucks, and he hit me with one of the all-time classic teen parenting questions:

Bill, how much allowance should I give my teenage son?

The short unhelpful answer: “it depends” — of course.

A longer, more helpful response? Here’s what I would suggest when it comes to allowance for a teen. (Note: I’m assuming it’s during the school year and your teen isn’t holding down an outside job. I’d recommend a job during the summer if possible and adjusting things accordingly):

Decide on the rough categories of things you want your teen to be in charge of buying — weekday lunches? clothing? entertainment? I’d try to keep it pretty simple. Don’t boil the ocean here. If you make it too complicated, you’ll struggle to consistently follow through.
Throw in a small amount for “random wants” — basically pocket change that your teen can blow on stupid stuff or, if motivated, squirrel away each week to save for that special item. Having to delay gratification and go through the extended act of saving is really key here. (See the famous marshmallow experiment.)
Have your teen propose a simple high level budget for the above. Review it together and revise until it’s acceptable.
Base your allowance amount on that budget.

The bottom line: comparing absolute allowance amounts with peers is pretty much meaningless. Families have wildly divergent expectations about what expenses their kids are responsible for covering and what constitutes a wise purchase given each family’s unique financial situation, money values, etc. That’s why I like the “budget-based-allowance” approach vs. the “but Johnny and Suzy get $X” whine-fest. Logical. Easy to explain. Easy to defend. Plus, when teens help come up with the budget, they feel ownership. They’re bought in. You’re virtually guaranteed to have less complaining and begging downstream in my experience.

Sometimes, it’s helpful to keep a few separate allowance buckets. For example, I had a separate use-it-or-lose it clothing allowance arrangement with my daughter. She couldn’t use clothing money for other stuff, but she could apply her entertainment budget to clothing if she wanted to. I also made her clothing allowance annual instead of monthly or weekly. I wanted her to wrestle with managing a large sum of money over an extended period of time. Experiment a bit, and try whatever tweaks make sense for your teens and family situation. Remember, you can always fine tune things over time, so don’t over analyze it.

Another thought: I’ve made several loans to the teens over the years for big ticket “needs” like a laptop. In the laptop case, the loan amount is for the delta between the most basic model and whatever fancy-pants, high end model they think they “absolutely must have.” I “garnish” their allowance to pay it back over a year or so. That way, they really appreciate how much those things cost as they see the payments going out each week and have to cut back on their other spending. The added bonus: they invariably take waaay better care of the things they buy that way. Again, it’s all about ownership and shared skin in the game.

A parting thought: for teens and college kids, prepaid cards are a really good option. I’ve been using prepaid cards with my 16 year old son for the last several months, and I’ve been very pleased with the results. There’s no worry about running up a debt like with a credit card. Prepaid cards are minimal hassle to get and low commitment relative to a full fledged checking account at a bank. All good things when it comes to dealing with the combustible mixture frontal-lobe challenged teens and money.

I’ll leave you with a list of teen prepaid cards to consider:

Teen Prepaid/Debit Cards

View more lists from FamZoo.com at FamZoo

Tips for Teaching Teens Responsible Credit Card Use

2013-04-17T12:12:00.000-07:00

This is a guest post by Alanna Ritchie. Alanna is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

Around 70 percent of college students have credit cards, and some of these kids begin their adult years of credit spending unsupervised and unprepared. The consequences can be devastating, as independence is then shrouded in a dark cloud of debt.

Instead of waiting until kids are out of the house, some parents choose to take advantage of the years where teens are developing spending habits by overseeing their credit education. Teens can either be an authorized user on a parent’s account — which can be closely monitored — or, if they have verifiable income, they can apply for their own cards.

Here are some steps to teach teens the proper use of credit as a tool:

Explain the fine print. As you introduce them to how credit cards work, make sure to include explanations about fees and interest rates. Understanding the ins and outs of interest rates and how these may change based on activity is critical.
Make a budget. Before getting the card, make sure that you both know what the money will be spent on and where the payments will come from. Then, when you get the bill, you can compare your goals with execution and adjust the plan for the next month if necessary. Track spending throughout the month, so that the bill doesn’t come as a surprise.
Discuss minimum payments. Make sure they understand the difference between the minimum payment and paying off the full balance every month.
Review the monthly bill together. Walking alongside your teen in this process will take more than a few conversations. After the first few bills come in the mail, it’s time to sit down together again. Together you and your teen can examine what is owed and how the money is being spent.
Have them pay it off every month. After you finish discussing the bill, it’s time to make payments. Instead of making only the minimum payment, teach teens to pay off the whole balance every month. Getting teens in the habit of doing this while they don’t have to carry the weight of expenses like rent, food and other bills, will prepare them to make the same choices in the future.
Keep balances below 25 percent of credit limit. Paying off the balance isn’t the only precaution your teen should take. Teach them how to maintain a good credit score by helping them understand credit utilization. If they have a credit limit of $500, for example, they should only use $125 of it each month.
Don’t rush into bailing them out. Instead of coming to the rescue when teens make impulse buys and accidentally overspend, discuss realistic options so that they can take care of their debts. This may mean working more hours at their jobs, holding back on spending until the balance is paid off, or — if your child demonstrates that they’re truly not ready to carry this responsibility — cutting the card up. (Too soon for a credit card? Consider a FamZoo prepaid card as safe, educational warm-up.)

Giving your teen the chance to manage their finances within the safety net of your household can be a valuable opportunity. The truth is that one day Mom and Dad’s rules will no longer matter. Credit card agreements will be the new set of rules, and it will be time for young adults to set some good rules for themselves.

This was a guest post by Alanna Ritchie.

How to Endorse FamZoo on LinkedIn

2013-03-15T15:33:00.000-07:00

Are you a satisfied FamZoo family or partner? Are we delivering on our mission to help parents teach kids good money habits? Do you have a LinkedIn account? If so, we’d be delighted to receive your endorsement.

Here’s how to do it:

Visit the FamZoo company page on LinkedIn.
Click on the Products link.
Click on the Recommend link under the FamZoo product you’d like to endorse.
Fill in a comment with a brief description of how FamZoo’s product has helped your family or your company. Short, sweet, and honest comments are great. Endorsements with no comments look pretty lame.
Click the Follow button if you’d like to get our updates within LinkedIn.

Thank you. We appreciate your support!

Teach Your Kids Money Management with Check Templates

2013-03-14T12:02:00.000-07:00

This is a guest post by Annie Harrington, a small business owner and freelance writer who is also keenly interested in all aspects of finance and design, including how to personalize checks.

I grew up watching my parents write personal checks at the store, and balancing their checkbooks every weekend at the kitchen table. The day I got my first checkbook was one of those rare “rite of passage” moments that made me feel a little more like an adult, but one thing I quickly realized was that I didn’t really understand how to manage my money properly or balance a checkbook, because I never learned and I was never taught. As a result of that experience I want to do all that I can to give my children the tools they need to succeed.

As parents we know that our kids have a lot to learn before they’re ready to venture out on their own, and it’s our responsibility to teach them those life lessons so they can be successful. One of the best lessons we can teach our kids before they get too old is how to manage their money properly. It’s a life lesson that can take a little bit of time for kids to grasp, so starting early is the best way to ensure they fully understand it before they’re out on their own.

Although there are many ways we can teach our kids money management one of my favorite methods is with “fake” check templates — click here or here for an example — because they allow for a hands on, tangible approach to money management that teaches more than just fake cash or piggy banks.

With a check template you’re able to teach your children all aspects of the check writing process. From filling out the appropriate “pay to the order of” information, to including the date, a memo, and a signature on the bottom, check templates allow you to go beyond the typical money management lesson by giving you the ability to break down each portion into a mini-lesson of its own. For example you can discuss the value of good handwriting and give your kids a fun way to practice. Another lesson you could teach is dollars and cents, how to calculate simple math in the head, and the importance of dates.

Not only can you teach these mini lessons but you can attach them to the overall goal of money management. By giving your kids a set of play checks you’re able to then pay them “play dollars”, for completing chores and other tasks, which they can stash in their piggy bank or deposit in their IOU account at a virtual family bank like FamZoo. Once they have enough play dollars saved up they’ll have the option to use their checkbook to buy rewards like extra TV time, new toys, or anything else you might decide.

Play checks are a fun exercise that gives you the ability to incorporate lessons for account monitoring, as well as checkbook balancing, so you can cover all the bases of money management at once. Unlike other lessons, this one can continue for days, weeks, months or even years. The more your kids practice, the better they’ll be. If they have a healthy respect for their earnings when they’re young it will be easy for them to carry that over to the real world when they’re older.

This was a guest post by Annie Harrington.

Allowances! Modifying Behavior with Money

2013-02-28T12:19:00.000-08:00

This is a guest post by FamZoo dad, Matt Fisher. Matt describes how he has customized the account, allowance, and chore settings in his virtual family bank to meet his family’s needs and match their values.

If your household is anything like mine, various attempts at getting your kids to participate in household chores through allowances have been futile. For starters, I rarely have cash on hand and when I do, it’s usually 20’s spit out by the ATM, which forces me to keep mental track of change owed. I also have trouble providing consistent “dollar values” to chores and tracking their completion, and to further complicate it, I don’t want the kids to spend all their money on Slurpees and Xbox games. (Well, okay, spending it on CoD titles is actually ok with me!) I’d really like them to get a sense of working towards a goal and learning some financial responsibility.

I’m an avid technologist (I’m one of those guys who was on the Internet before the WWW existed) so like so many other aspects of complicated modern life, I figured software could help. With a little Googling, I found a web application call FamZoo.com and decided to give it a whirl. Here are my thoughts on FamZoo and how I’ve set it for my family but don’t interpret this as a formal review — I make no attempt to be complete, objective, or compare to other software.

Setting Up Your Virtual Family Bank

FamZoo, which I subconsciously refer to as Family Zoo (although their url is actually famzoo.com) is a web application that allows families to create allowance and savings plans that are as complicated or simple as they’d like. It allows kids to track what they’re owed in allowance, for all the times parents never actually have cash on hand. Very importantly too though, it allows you to create a checklist of chores with associated payments and deductions, so the kids can get credited for doing their chore and debited if they don’t. Additionally, it allows me to create multiple target accounts of money for them, such as free cash, savings, charitable donations, etc and split their allowance into those accounts to enforce savings. This allows me to enforce traditional methods such as “3 Jars” and the “50/30/20” rules that are suggested all over the Internet.

You can also define multiple income streams for the kids, which I took advantage of to set up a fixed weekly lunch allowance that goes straight into their lunch account. When setting up incomes, you have your choice of methods to use, and it provides a few calculators for common methods. For example, enter your kids’ birth dates, and FamZoo will automatically do the “buck a week per year of age” approach for you. So in net, you can define multiple inputs, and multiple outputs, each with separate rules — this is great flexibility that I took advantage of.

Some advanced features I appreciate include:

the ability to control recurring chores,
automatically add interest on a weekly, monthly or yearly basis,
create targeted savings plans for goals (ie, new cellphone),
perform automatic matching of contributions, and
the ability to let the kids credit/debit/transfer between accounts.

A note of caution: letting the kids control their own credits and debits opens Pandora’s box! A transaction audit log is provided, but in just 2 minutes my awesomely fast clicking son generated enough confusing unearned transactions that I had to go back and delete them. I’ve included more detail about this issue at the end of the post.

It quickly became apparent that the two most core concepts were: how to structure the accounts, and how to structure the corresponding chore checklists. For purposes of simplicity, and avoiding World War III, I’m keeping both structures identical for both kids.

This is what our account structure looks like:

The key goals here are:

set aside their lunch money specifically for that, and
enforce strong savings concepts, and social responsibility.

Emphasizing Giving and Saving with Splits

I’m very proud of our household culture of giving (DD’s 11 year birthday gift request was donations to her favorite non-profit), and I like that FamZoo defaults this Charitable Giving category in. All of the categories are editable, by the way. In fact, pretty much everything you see in the application can be changed and customized.

The kids’ income is provided in two manners, and FamZoo makes a handy diagram that shows the flows:

Their lunch “income” is routed directly into their lunch account. As a description for this account, I added a note that they can keep any lunch money if they make and pack their own lunch, but not if they skip lunch at school. This was a little motivator I decided to use, as opposed to making it a “chore”. Kids don’t like chores.

Their weekly allowance, however, is split across the rest of the accounts to enforce best practices, as such:

This is basically a kid friendly modification of the 50/30/20 rules popular with some adults.

I feel like this is good structuring. The kids are pushed into saving a healthy amount of their money, but the majority of it is still in a general account that they can spend at will (much more generously than they’ll experience as adults!) I really like the ability to enforce these splits. While teaching the concept of money and earning is important, I think it’s really important to our economy to reinforce the concept of saving cash.

Chores With a Light Touch: Focusing on Opportunities

The chore management is just as important to me, though. We’ve never had a strongly regulated household for a variety of reasons, including less disciplined parenting than we would have liked as well as other really legitimate reasons. Therefore, I didn’t want to take too heavy a hand on chores. Nobody likes chores, and the more intelligent the kid, the more challenging it is to motivate them with menial work. I do want to leverage the “automatically make or lose money” capability of FamZoo, but not for everything. Plus, using the automatic credit/debit feature means interacting with FamZoo every time a chore is done, or risk automatically losing that pay.

With this in mind, I decided I do want a few things to be punched off every day, but that the majority of chores and behavior modifications should be treated more as opportunity, not requirement. So, I built a system of fixed allowance each week using the age method. This is a common suggestion on how much allowance to give, and the site will automatically calculate it for you based on your kid’s age.

Chores are scheduled on a regular basis, and include a credit and a debit. I don’t structure the credits and debits the same though. When the chore is completed and they log in and tick the box, that amount flows into their accounts according to the weekly allowance split. In other words, chore credits are automatically divided between general spending, long term savings, short term savings, and charity. A chore debit, however, is automatically incurred the day after an uncompleted chore is assigned, and comes directly from the child’s general spending account. In other words, the kids automatically lose money for not doing chores, and they lose directly from where it hurts — their spending. You could debit multiple accounts via splits as well, but I predict that the kids will view the enforced savings negatively, so deducting from there doesn’t really have much impact in terms of behavior modification. FamZoo does a great job of letting you decide which account, or which split method (you can define multiple split methods if you’d like) to choose when building a credit or a debit.

Gamification Meets Chores: The Regular, Super, and Ultra Bonus

I have only a few chores — small, daily, easily accomplished things that will get them going and get them motivated. Everything else is either a bonus, or a penalty. Penalties are straightforward — behave poorly in some manner, and lose money directly from your general spending. Bonuses are structured in three ways:

A Regular Bonus which is a small amount of money that’s split.
A Super Bonus is a larger dollar amount that goes directly into their spending account.
An Ultra Bonus is geared at the toughest behavior modification, is high dollar, and goes directly into spending.

Yes, I’m trying to make this look and feel like a video game.

The actual checklist looks like this:

I have additional bonuses for things like:

Eating a salad as a meal
Skipping dessert
Spending a day without electronics (This one is high dollar!!)

The Kids Will Be Paying for More

Some of these dollar amounts may look unreasonably high, but remember, I’m trying to create some serious behavior modification here, and I do enforce savings. Part of all this plan is that the kids are going to start paying for things I’ve traditionally paid for out of pocket, such as their cell phones, ongoing video game charges, riding lessons, electronics etc. With that considered I don’t think it’s unreasonable.

Day 1: Introducing FamZoo to the Family

The kids reacted very well to the “few chores, but many potential bonuses” philosophy. At first DD was very glum when I started showing her the site, but when she realized that she only got penalized for a few basic chores, and the rest was all upside, she cheered right up! (Heh, I didn’t mention all the Metric 2 comp and mandatory cross-product goals yet...no wait, that’s MY job.)

DS reacted well also, agreeing that the few chores I did ask each day were pretty basic and easy. The chores were simply:

don’t leave clothing lying around,
walk a dog every day,
take out the trash.

Easy peasy, and that was the goal.

Reported a defect: First of all, there’s a defect in changing chores from repeating chores to non-repeating. Basically it won’t work, and you’ll have to delete the repeating chores and key it back in. I already notified the FamZoo development group, and like a true software startup, one of the developers responded within an hour, on a Sunday night of a holiday weekend. Ah, startups, how I love to miss thee.

Day 2: Working So Far

Today I logged in as an adult and deleted the automatic debits that occurred, since I wanted to give the kids a warm in period . By reminding them gently through the course of the day that they did have some chores to do, and that there were some big bonuses available, I got them to pick up laundry, take out trash and recycles, do dishes, and even spend a couple hours cleaning the house with me. DS even emptied all the trash cans and took the trash to the curb, willingly, cheerfully, quickly, for possibly the first time ever. His best friend was over all day for a lan party, which definitely had him in better moods though, so I can’t tell how much was the incentive plan, and how much was having his friend over.

A Warning About the Child Permissions Setting

As mentioned earlier on, I discovered another aspect of the software, which prompted me to change some settings. You can give the kids the ability to credit, debit and transfer funds between accounts themselves. This actually works as designed; if you check that box from within an account setting they can indeed add and remove funds, and transfer funds. The glitch is that they can literally add $500 to an account if they wish. You have the option of creating email or text based alerts (which I did to confirm operation), but this essentially gives them a complete backdoor to gaming it. Less clever kids will do something like add 500 dollars — easily detected through basic auditing or notifications. Clever kids like mine however, will quickly learn that adding a few bucks here or there, justifying it with a “oh remember I did this but forgot to log in and check it off” will quickly spam the human auditor (Mom or Dad) and a-skimming they will go.

Clearing the Child Permissions check box in the account settings will prevent this possibility, but unfortunately also prevents them from transferring funds between accounts. I’m fine with this, as I really want them obsessing more about earning the funds than re-allocating them since I’ve already defined their allocation splits for them, and when they do want to, say, move a bunch from general spending into charity or long-term savings, I look forward to the conversation

I think a good future design, however, would be to separate transfer permission from the credit/debit permission with the requirement that the parent be able to designate to-and-from relationships — this would also have to be many-to-many, so that I could allow transfers from savings or general spending into long-term savings. I think it would also be a creative design to allow credits and debits to be request based. Rather than notifying that the action occurred: FamZoo would send an email or create a message queue in the interface notifying the parent that the child requested to credit or debit. The parent could permit the action from the message queue in the UI or by responding to email/text alerts.

I don’t like the idea of my kids getting to gunk up the transaction log. Please note this is a very real risk. My son, within about 45 settings of logging in, had rapidly created a complex set of transactions that I actually had difficulty reviewing and reversing. But then, you know my boy, he’s an intelligent and evil as his old man... That is, of course, all hear-say!

A Few Other Caveats

The kids also can’t “print a check out” like other apps (that let them print a check to be cashed by Mum or Dad, and automatically debit the system). I’m fine with that too — again, I’m really trying to encourage focus on the earning and the behavior modification.

Another glitch I found is that chores without an associated due date (which are the majority of mine) do appropriately appear as having no due date, but they disappear when punched off and can’t be reused. In other words, they’re still temporal, despite not being assigned to a specific day. DD had punched a bonus yesterday that she wasn’t able to punch today because it was gone. The solution to that was to change all the bonuses from “No Due Date” to a daily recurring, so that they showed up every day. Since these are bonuses, with no penalties for missing them, the fact that they expire every day have no bearing.

Final Thoughts

I would love to see some more behavioral modification features like bonuses and “constants” included in FamZoo. It’s already very feature rich, and I think it’s prime for extension into other clever areas. This is, in fact, a piece of software I would love to work on myself. It’s fun. It’s well designed and executed to date, but I can already identify meaningful ways for it to grow.

This was a guest post by FamZoo dad, Matt Fisher.

Prepaid Card Family Pack Featured in TIME

2013-02-20T12:21:00.000-08:00

Last Friday, our soon-to-be-released prepaid card family pack capability received some truly wonderful coverage by TIME’s Dan Kadlec. Dan was kind enough to spend quite a bit of time with me walking through a very detailed online demo of the pre-release family packs that we’re currently testing internally with FamZoo and TransCard families. Check out his write-up here: How to Master the Allowance Question and Prepaid Cards in One Shot.

Naturally, when presented with a radical departure from current practices in the teen prepaid card industry, many people are skeptical. Count one “Tenacious Jim” among the skeptics. Jim left the following comment on the article:

Funny Famzoo shows no link to the terms and conditions. Sometimes those don’t show up till the sign up page but there is nothing there either.

That is usually a sign that something isn’t right. They are hiding something or a link to the accounts terms and conditions would appear somewhere.

They are not a bank. Are funds FDIC insured by a Bank? What are the associated fees for ATM usage, for transactions etc. None of this is mentioned. The list of partners shows no bank listed.

Dan mentions that the card can be loaded by a Bank account for $3 or so (he apparently cannot remember an exact number) and says that is the last fee you’ll see. However what happens the next time you load money? Ooops, there is that $3 fee popping up again. Dan forgets to mention that ACH transfers between banks (again what bank is behind FamZoo?) take 2-3 business days so when junior needs the latest game that night he has to wait for 2-3 days. A transfer between accounts at Bank America would be instant.

Jim raises some good, pointed questions. Here’s my response:

Jim, skepticism is good a good thing, so I respect your concerns, and let me do my best to address them. First, we’re still testing the product prior to its launch in the next 1 to 2 months, so that’s why we do not list the issuing community bank and the cardholder terms on our site yet — nor do we have a link to order the family packs just yet. What we do have is the ability to reserve a spot for one of the first 1,000 family packs which will be offered to subscribing members of FamZoo at no additional charge to what our subscribers are paying today for our current Virtual Family Bank offering. Our current pricing starts at $5.99/month if you pay recurring monthly, or you can pay in advance for up to 2 years for just $60. Family Packs will be available at FamZoo.com (we’ll be working with a specific issuing bank which we’ll announce when the family packs are available), and they will also be available in co-branded form through a variety of community banks.

As for fees, the goal is to subsume as many fees as possible into a single predictable monthly fee and eliminate random usage fees. The one area that is tricky is loading the “funding card” from external sources. We can’t control what some banks will charge. E.g., Wells charges me $3 to transfer to my funding card (3-5 days), but I can do it for free via Dwolla (but it takes longer). We’re expecting that our partner community banks will offer that service for free when transferring from one of their bank accounts. That said, our whole design goal is to make those external loads very infrequent. On the other hand, the very frequent transfers between parent and child cards within a family pack for allowance, chores, parent-paid interest, penalties, etc are all completely free and immediate. That’s because they are card-to-card transfers within our control. As long as you keep your funding card reasonably well stocked, you can shoot the money to junior’s card to buy his “latest game” immediately — but I recommend you make him save up his earnings for it first!

As I said, Jim raises excellent questions, and we hope you won’t hesitate to contact us with more. Just comment below or hit the Contact Us link on our site if you’d prefer to communicate with us privately.

The Prepaid Card Family Pack: Multiple Cards, One Flat Fee, Good Money Habits

2013-02-07T12:32:00.000-08:00

Is your child ready to make purchases directly? (Under your watchful eye, of course!) Have you ever considered getting your child a real bank account, a prepaid card, or even a credit card, but then been discouraged by:

unpredictable high fees,
the potential to run up debt,
the lack of family and kid friendly features,
the focus on spending versus developing good money habits, or
just the plain hassle of getting started?

If you’re nodding your head to any of the above, we’ve got something really cool for you to consider. It’s something that addresses all of those issues. It’s designed from the ground up specifically for the family — not the individual, not the teen, but parents and kids working together as a collaborative unit on good money habits. It’s the FamZoo Family Pack of prepaid cards. We’re developing it with our partner TransCard, and it integrates seamlessly with your existing FamZoo virtual family bank.

NOTE: See our recent Family Pack coverage in TIME by veteran personal finance journalist and author, Dan Kadlec.

The family pack consists of “funding cards” that belong to one or more parents and “dependant cards” that are associated with one or more children. Kids may optionally have multiple cards for different categories of spending, or for building up savings, or for making charitable donations. The cards in a given family pack are linked together by a common group identifier — a novel new (patent pending) concept that has been integrated deep within the TransCard prepaid technology platform.

When using a family pack, parents periodically load up their funding card(s) from an external source with relatively large sums through a variety of card load options ranging from a GreenDot MoneyPak to automatic payroll deposit to online transfer from a partner bank account. These funding card loads may or may not incur fees depending on the arrangement or partner, but the intention is for these loads to be very infrequent relative to the parent funding of the child cards.

Money flows from the parent to the child cards though frequent “micro” payments and incentives defined and controlled by the parent. Examples include a scheduled allowance payment, a savings interest payment, a matching contribution, payment for a completed chore or odd job, a reimbursement, an ad hoc transfer, etc. These frequent micro-payments flow from parent card to child card within the same family pack via card-to-card transfers with no fees.

Money can also flow without fees back to the parent from the child. Examples include “bill payment” for the child’s portion of a shared family expense (for example, the child’s portion of a cell phone data plan) or even penalty assessments by the parent (for example, a $1 fine for not completing an expected chore or a penalty for going into debt with the parent after a scheduled “bill payment”).

The prepaid card accounts are seamlessly integrated with FamZoo’s existing IOU accounts (also patent pending). Each child’s prepaid card account has a corresponding builtin IOU account. If the parent funding card has insufficient funds to make a micropayment (like for a recurring allowance payment), the shortfall is automatically recorded in the associated IOU account as a debt owed by the parent to the child. When the parent ultimately loads more funds on to the funding card, any IOUs to the children are automatically repaid.

Conversely, if a debt is owed by a child to the parent, subsequent parent payments go toward paying off the child’s outstanding IOUs first before any additional money flows to the child card.

The family pack product is a superset of FamZoo’s existing Virtual Family Bank offering. It includes support for standalone IOU accounts for younger kids (independent of prepaid card accounts), interactive educational personal finance tools for budgeting and goal tracking, and mobile access via iPhone/Droid or text messaging.

What about fees? Teen prepaid cards tend to get a bad wrap in this department with youngsters inadvertently racking up charges for seemingly benign actions like balance inquiries and ATM transactions. Not so with the family pack. Parents hate those unpredictable fees, so we’ll be offering the family pack for one flat monthly fee. No “hidden” usage fees for your child to unwittingly rack up. Nada. None. Zippo. The only additional fee you might encounter would be for periodically loading up the parent funding card as described above — but that’s up to you because there will be free options available.

So how much is that flat monthly fee per family? We’re not completely sure yet for the long run, but here’s a super sweet introductory deal for our first 1,000 families only. If you are (or become) a paying subscriber of FamZoo, we’ll throw in the family pack (first 1,000 families only) for no extra charge beyond our regular subscription fees which currently range from $5.99 per family if you pay month-to-month all the way down to the equivalent of $2.50 per month per family if you prepay for two years in advance. That’s an absurdly awesome deal — no doubt about it. The usage patterns of our first 1,000 family pack families will allow us to determine a viable flat monthly fee to charge for subsequent subscribers going forward, which will undoubtedly be higher. Note: we reserve the right to terminate this introductory offer at any time, even prior to reaching the 1,000 family mark if we deem appropriate.

How do you get your family in on this deal? Just contact us and let us know you’re interested in reserving a spot as one of the first 1,000 family pack families. We’ll add you to our list. By the way, it’s OK to change your mind later and you don’t have to be a current FamZoo subscriber to reserve a spot, so if you have any interest whatsoever, you should stick your name on the list now.

When will the family packs be available? Any month now. We’re applying the finishing touches as we thoroughly road test the cards in the real world with the families of FamZoo and TransCard employees. You can take a peek at some of my early experiences with my son here.

We’ll notify the first 1,000 families on our list as soon as we’re ready to go.

How to Create an Online First Dibs Chore Chart

2013-01-25T11:54:00.000-08:00

Lots of parents ask us about the best way to set up an online “first dibs” chore chart system for the kids in their family.

What’s that?

Here’s a typical description from FamZoo Mom Elizabeth H.:

I’d like to create a chore checklist that is open to all of my children, and the one to check it off first gets the money associated with that chore. Is that possible? For example, if the trash needs to be taken out and child 3 does that, I would like for him to be able to check the box and get the money.

Yep, we can do that in FamZoo. Here’s how you set it up.

First, create a new checklist, give it a name, and share it with the whole family so that each of the kids can see it when they sign into FamZoo separately. Be sure to check the Rewards and Penalties option on the list to enable the assignment of payments for each chore.

Currently, chore payments must be assigned to a specific child’s account up front, so you’ll need to create a chore item for each eligible child.

For example, suppose we have three children: Cub, LilSis, and BigSis. Let’s say that every Monday, the “take trash cans to the curb” chore is up for grabs. Start by creating a repeating item for Cub with the following settings:

Description: Take trash cans to curb (Cub)
Repeats: Weekly on Mondays
Expires: After the due date by 1 day
Reward/Penalty: Credit Cub’s Pocket Money $0.25 when item is checked

Notice how we include Cub’s name in the description of the chore. Now, we’ll add another item that’s identical to this one except we replace Cub’s name in the description with “LilSis” and we pick LilSis’ spending account instead of Cub’s. Rinse and repeat with BigSis to create a third and final item.

The first kid to do the chore checks off their item to get the reward.

Checking off the item automatically makes a payment of the designated amount to the appropriate child’s account.

If a child accidentally (or not so accidentally!) checks off an item, just un-check it to automatically reverse the payment. Do not delete the checked item because leaves any existing payment transactions in place.

So, that’s how your create a first dibs chore chart for your kids in FamZoo. Questions? Comments? Don’t hesitate to contact us.

Note: We plan to make this even simpler to set up in the future by assigning the payment account on the fly based on which child checks off the chore. That way, you’ll be able to have a single item for each chore that’s up for grabs.

FamZoo on RebelMouse

2013-01-13T18:01:00.000-08:00

I stumbled across a neat service this weekend that allows you to present your combined social media stream — Facebook, Twitter, your Blog, etc. — in an appealing visual way. It’s like a running gallery of attractive sound bites. The service is called RebelMouse.

You can see the FamZoo social media stream on this page. If you’re visiting this post in your web browser, your should be able to see our stream embedded below as well.

Cool!

Resolve to Give Your Kids Hands-On Money Experience in 2013: Family Finance Picks #69

2013-01-06T18:51:00.000-08:00

What New Year’s resolutions have you made in the parenting department?

How about teaching your kids good money habits?

If your kids are old enough to ask for purchases at the check-out stand, they’re old enough to start practicing managing their own money. In fact, John Farrell of Rider University points out in the first article below:

Money management is a set of life skills that needs to be taught throughout our lives, from 5 to 105.

In other words, start early and don’t stop!

Ideally, schools should play an important role in financial education, but I really like what John has to say regarding the role of parents:

Parents actually have the primary responsibility for teaching these skills. What better place to teach about money than in the “economic unit” of a family. I believe parents are in the best position to educate their children.

In fact, this sounds perfectly in line with what we’ve stated on FamZoo’s “Our Philosophy” page for many years, which I’ll repeat here:

We believe a parent is a child’s best mentor. As a parent, you are in the best position to teach your children many of life’s most important skills. Nobody knows your kids and your family values like you do. You want the best for your children, and they naturally look to you for structure and guidance. We’re here to help you be the best mentor you can be.

Finally, I like how John emphasizes teaching personal finance skills in a “practical, hands-on manner:”

As educators, we also know that in-class learning can only take our financial education so far; learning by doing is a key element of anyone’s financial education. This is where parents come in as teachers, coaches and role models.

By all means, don’t make the mistake that Mary’s parents made in the second article below. Since they considered discussions about money to be "vulgar," they never discussed money matters with Mary as a child. Furthermore, they never even allowed her to handle money. Not surprisingly, Mary had money issues as a young adult.

So, three key things to keep in mind when it comes to your kids financial education:

Start early.
Be involved as a parent.
Give your kids hands-on practice.

Need help getting started? Check out the 12 mom money rules in the second article. You might also check out my 3 simple tips here.

To help implement your money rules, you might resolve to set up online bank accounts for your kids like New York Times writer Ann Carrns describes in the third article. I applaud Ann’s effort, but to make things more hands-on and engaging for the kids, I recommend a virtual family bank approach instead, or perhaps a teen prepaid card for the older kids.

All that said, don’t spend too much time agonizing over which precise rules and tools are best. The most important thing is to resolve to start teaching your kids good money habits through hands-on practice in 2013. Then, follow through with your resolution going forward — fine tuning as necessary along the way.

Your kids will thank you...someday.

Make Financial Literacy a Lifelong Quest

by Chris Kissell on Fox Business Personal Finance

I love what John Farrell, Assistant Dean at Rider University, has to say in this interview about the role of parents and schools in teaching kids about personal finance!

Discuss on FaceBook.

Any Time is a Good Time to Teach Kids about Money

by Alexis on Finances Online

Three moms share their top money rules for their kids. It’s very interesting to see how the diverse childhood experiences influenced each of the Mom Money Rules. It’s important to see that affluence does not guarantee money savvy behavior; communication and hands-on practice with personal finance from an early age is critical.

The 12 rules are split into 4 buckets: 3 individual sets of rules from each of the moms followed by one set of common recommendations. I don’t actually see any inherent contradiction in any of the 3 individual sets of rules. I’d encourage parents to apply elements of all 12 in their own way.

Discuss on FaceBook.

My Resolution: Online Accounts for Allowances

by Ann Carrns on New York Times Bucks Blog

Ann Carrns writes in the NY Times Bucks blog about her resolution to use ING sub-accounts for tracking allowance for her daughters. I certainly applaud Ann’s resolution to systematically work on good money habits with her daughters each week, introduce them to the concept of online banking, and teach the very important lesson that a balance amount on a screen corresponds to real money.

Whether we like it or not, our kids are entering a world increasingly dominated by electronic transactions. While a good starting point, a piggy bank or sock drawer with wads of cash does not prepare them adequately for that reality. I think sub-accounts are a fantastic banking feature — a great way to take the “envelope budgeting” approach to personal/family finance online. Ann may still wish to check out the “virtual family bank” services that her colleague, Ron Lieber, mentions in his article because they create a much more hands-on experience for the kids. Kids can sign in on their own to see their own funds, make/track savings goals/plans, get weekly statements, review their spending history, make simple budgets, etc. They feel a real sense of ownership and responsibility that way.

Parents can set up more flexible incentives/financial arrangements beyond simple recurring transfers (chore charts, matching, parent-defined savings interest rates, “commission” plans, automatic bill pay for shared expenses like cell phone data plans, loans for big ticket “needs” like computers for school, etc).

A virtual family bank is really identical in concept to what Ann is doing at ING except that the kids are more directly engaged, personal finance learning tools are built-in to the experience, and parents are in complete control of the bank “rules”. Some parents still use an ING sub account in conjunction with our virtual family bank IOU accounts so they can be sure they have the money on hand when their child needs to make a purchase. In the first half of this year, we’ll be introducing an integration of our virtual family bank accounts with prepaid card accounts to make that blended approach even more convenient.

Related FamZoo Activity: Set up a virtual family bank.
Discuss on FaceBook.

We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 3,068 now!

A Teen Reflects On a Decade of Spending

2012-12-29T09:58:00.000-08:00

The end of the year is a great time for some quiet reflection. Take stock of the important areas in your life — including financial — to provide a little perspective and priority before jumping into resolutions for the New Year.

Like good money habits, the habit of periodic introspection is an excellent habit to start developing early in life. In that vein, this teen guest blogger — who happens to be one of my sons — looks back on a decade of financial behavior.

Once upon a time — 1,086 transactions ago to be precise — my FamZoo experience began. June 16, 2002, marks the beginning of an eye-opening evolution of 50 cents. My humble beginnings of a “gumball” here and a “superball” there (8/10/02) soon transformed into a pattern of impulsive behavior.

I’ll be honest with you, I don’t even know what the “Adventures of Bleeposaurus” means, but apparently it was worth dropping $15 on in 2003. We also can’t forget the heavy toll of a “broken window” the same year (11/01/03) — typical me. But hey, if I could milk my father with back-scratches in exchange for a few dollars, why not take advantage of the extra moolah?

But then it happened, with the devastating combination of both Halloween and sports video games, my bank account dipped into the negative. In 2004, I learned not to spend more money than I had. Unfortunately, that’s literally all it taught the young me because I still had no problem emptying my balance to $0 with a purchase. With allowance and “good behavior during babysitting” fueling my small, yet growing spending account, I managed to save up a decent amount of money. With a little bit more from picking up the yard and washing the car, I made the infamous “Heelys purchase.”

That pair of Heelys roller shoes is undoubtedly my most recognizable purchase, not only because it drained all my funds in one fell swoop, but because it was simply a dumb and impulsive act of squander. Sure, they were enjoyable for a little while, but it was a foolish purchase in the long run considering the cost.

Apparently I was also a punk, racking up some penalties with “rude talk to others” (9/25/05). In 2005, I learned not to make impulsive decisions and not to be a punk. Just kidding, I didn’t absorb either lesson at the time. To this day I still do both, but I make sure I still have money left over after a purchase. For your enjoyment, I bought “Heelys” again in 2007; effectively halving my balance at the time. Whoops!

From 2007 to 2011, I would say my behavior wasn’t too shabby. I saved up and spent money on movies with friends, lacrosse sticks, and video games. The most regrettable purchases being all the money I spent on video games, but so goes the story of a dolt; and admittedly, I still do occasionally spend money on games.

At this point in my journey (2011), I learned to not be so impulsive, save my money, and respect the role it plays in the world. I still waste money here and there, but I understand the significance of my actions and guiltily accept my behavior at these times.

In 2010, my father gave me a loan for half the price of a MacBook Pro. I understand how fortunate I am to have this computer and take advantage of my blessings. I keep very good care of it, and besides the issues it was manufactured with (known problems!), it’s still in pristine condition. While paying off the loan, my allowance would split into four accounts: General Spending, Long Term Savings, Charitable Givings, and Computer Loan. Paying off the MacBook Pro taught me how to respect my property, understand loans, and appreciate my money.

In the current year of 2012, my money handling thus far has been good, but not great. One potential mistake is a “mini longboard” purchase I made over the summer. I used it, but not to the point where I felt it was worth the cost I payed for it. One certain mistake is the continued payment on video games; but at least I maintain a healthy amount of money after each purchase and space out my impulsiveness.

All this reflection is made possible by the Account Transaction tool built into Famzoo. Being able to look back upon my account history is really fascinating. Every single debit and credit, with its date, is captured and recorded for viewing purposes. I can’t tell you how many times I cracked a smile, laughed, and face-palmed looking over my spending habits. Having a graphical version is also interesting because it provides a visual representation of big purchases and the effect it has on one’s balance.

I believe it’s been extremely beneficial for me to see my spending habits and learn from my mistakes and I am certainly pleased with my financial development over the years. Famzoo has taught me through experience how to manage my money, use my money, respect money, and learn from my purchases.

Guest post by P. Dwight

Do Online Allowance Sites Impede Meaningful Money Talks With Kids? Family Finance Picks #68

2012-12-18T14:37:00.000-08:00

In her recent MintFamily article Allowance on Autopilot, Beth Kobliner discourages readers from using online allowance sites. After declaring that FamZoo is nothing more than a “glorified gold star chart” (I guess she missed the automated compound interest, splitting between accounts, matching contributions, savings planner, expense tracking, loan tracking, and budgeting tools to name a few items), Beth delivers this bottom line assessment:

My main concern: Allowance sites can be an impediment to money talks, rather than a way to facilitate those conversations. Why talk about saving for a goal or the family budget when you can just automate your kid’s weekly allowance?

Hmmm — that’s odd. Our design goal has always been to increase those quality conversations and boost fiscal awareness, while automating away much of the tedium that causes many parents to fall off the chore/allowance wagon after just a few weeks.

Beth is a well known personal finance journalist and a member of the President’s Advisory Council on Financial Capability, so I’m inclined to take her analysis seriously. I wondered whether Beth’s harsh judgement was based on personal experience with an online allowance site, and, if so, which one? However, in re-reading the article, I noticed the following tell-tale lead-in to paragraph three:

Having never used an allowance website with my kids...

Hmmm.

OK, so we’re left wondering how Beth came to the conclusion that online allowance trackers discourage meaningful money talks with kids. Pure gut feeling? I’ve tried reaching out to Beth on numerous occasions including just last week on her Facebook post about the article — offering to walk her through our product personally. So far, no response, but it remains an open invitation.

A comment on Beth’s article captures the perplexing nature of her assessment:

I agree about the importance of financial education for our children and I am grateful that you would write to try and increase the awareness. But I think this article and the article about old school allowance are lacking in helping any become more financially educated. In old school allowance it seems you tell a story of how it became too hard to track so you gave up trying to teach about financial education when it became the most important (teenage years). And then this post you discount the tools that allow it to be easy enough to track. We have been using an online tracker for a while now and it has been the best thing for our children and my house has never been so clean. But I do not use a traditional allowance system, the online system allows me and my children to track their financial decisions.

In the same vein, when I asked FamZoo families on our Facebook page whether FamZoo is an impediment to money talks with kids (see post), here’s the feedback we received:

Anne E: We’re recent adoptees of this online allowance process. Truth is, I was always of the view that allowance is kind of dumb. Our children do chores and help out around the house because that’s the right thing to do. We started out with Famzoo so they could learn budgeting and responsibilty with their money. They have tasks or chores equal in value to their weekly allowance. If they don’t do their tasks, they get that amount deducted from their allowance. Guess what this has done? It has them working harder! They now associate their work with money. For our family, it has been helpful and far from an impediment.

Andrew P: That is a shockingly poor article — firstly, she openly admits to not having used any of the sites, then quickly progresses to discussing the pros and cons — on what basis? Secondly, she freely admits they are a ‘cash’ using family. That is admirable, and maybe follows conventional wisdom, but we are increasingly moving towards a cash-free society. It is far better that our kids get used to dealing with money as a ‘cyber’ currency now than have them struggling with the discipline required in 10 yrs time. As far as meaningful discussions with our kids, I fail to see how FamZoo is an impediment. Our family has had many conversations about saving vs spending, benefits of compound interest over time, not rushing into purchase decisions, etc. FamZoo helps in this regard as the kids have their own login and can see their savings grow. So Beth — you can keep your cash methods — my family are sticking with FamZoo.

Shawna C: I just opened a trial FamZoo account this week and explained a bit about the idea of savings goals and compound interest to my 6-year-old tonight. I also set up a chore list for each kid, but it’s not coupled to the allowance so they can’t say, “I don’t need money this week so I’m not going to bother with my chores.” So far, so good with Famzoo!

Denise W: Well, she has not seen my FamZoo account then for sure. FamZoo and watching your money is talked about almost daily in my household.

Melissa K: I have found FamZoo to be a huge asset when it comes to teaching my 11 and 13 year old boys about money! We incorporate a lot of Dave Ramsey’s philosophies as well. We are not creating an “entitlement” culture, we are creating a family that understands that attention to responsibilities and a strong work ethic has positive results. The banking aspect of this site has resulted in a greater desire to save and a true sense of financial empowerment.

Now, these are our fans, so they’re admittedly biased. That said, their responses are based on actual experiences.

I welcome dissenting opinions from those who have had different experiences with online allowance and chore tracking sites — particularly FamZoo. Honest, thoughtful criticism helps us refine our offering and deliver a better service, so don’t hesitate to contact us.

In any case, if you scratch beneath the surface, you’ll find that we offer far more than a “glorified gold star chart.” More importantly, by putting the tedium of your kid’s money management on autopilot, we keep the meaningful money talks front and center week in and week out.

MintFamily with Beth Kobliner: Allowance on Autopilot

by Beth Kobliner on Mint Blog

The article that sparked the commentary above.

Discuss on FaceBook.

A Virtual Bank for Kids’ Allowance

by Dan Bobkoff on Marketplace Money Matters

The recent public radio Marketplace segment in which Suzanne Skyvara describes how she teaches her kids good money habits with FamZoo, and Beth Kobkliner expresses her skepticism.

MintFamily with Beth Kobliner: Allowance, ‘Modern Family’ and My Family

by Beth Kobliner on Mint Blog

An earlier article by Beth that covers her family’s stuggles with allowance (“With three kids, my husband and I still haven’t mastered the art of giving them allowance in a timely fashion.”)

Allowances Don't Spoil Kids, Parents Do. Family Finance Picks #67

2012-12-11T15:42:00.000-08:00

Last week, Dan Kadlec invited me to chime in on the “allowance debate” for his article in TIME Business & Money:Kids and Allowance: The Debate that Divides Us. I was honored to be included alongside some of the most prominent names in personal finance (Suze Orman, Dave Ramsey, Jean Chatzky, Janet Bodnar), and I was relieved to be grouped in the “thoughtful” corner (I can just see my kids rolling their eyes now).

Here’s my stance on the allowance debate — most of which Dan was nice enough to include in the article verbatim:

I find the allowance debate to be a diversion. To me, the far more crucial thing is practice — early and often. I think it’s critical for parents to make sure their kids get regular hands-on experience making real spending, saving, and giving decisions with a modest, constrained supply of their own income. I don’t think the specific source of that income (unconditional allowance, chores, outside jobs, or a hybrid thereof) is hugely important — as long as it’s thoughtful, consistent, clearly communicated, and in line with the family’s values.

Furthermore, the appropriate source and amount of that income varies with age. As kids mature, they can manage spending for more than just little occasional “wants” and start tackling budgeting and expense tracking for specific needs — like clothing. Over time, they can also be expected to kick in more and more income on their own from outside work.

My bottom-line advice to parents: don’t let agonizing over the allowance vs. chores debate get in the way of getting your kids started with hands-on money practice — pick an approach, get started, and tweak it over time.

Beyond the compliment of being included, I was particularly pleased to see Dan cast a critical eye on the Mandell research that purportedly shows an inverse relationship between receiving an allowance and developing financial aptitude. The less discerning journalists tend to just run with a link-bait headline like “Allowance Does More Harm Than Good” and then couple it with a fluff piece sans any meaningful analysis. A more accurate headline that more closely matched the findings would really read something like: “Thoughtlessly forking over an allowance with no discussion or guidance probably won’t teach your kid good money habits.” No, duh.

My feeling: Allowance isn’t the problem, but parents might be. Allowance is just one simple tool (among many) that parents have at their disposal. If parents are thoughtfully delivering a modest allowance as a way to give their kids regular practice managing a constrained financial resource (also know as operating within a budget), I can’t fathom how that would inhibit the development of their financial aptitude. If the “research” shows otherwise, I’m inclined to think there are other factors at play that are skewing the results (see section 2 of this post for more thoughts on such studies).

Kids and Allowance: The Debate that Divides Us

by Dan Kadlec on TIME Business & Money

Dan Kadlec covers all the “expert” (present company excluded!) angles on the ever polarizing allowance-for-kids debate: no allowance ever vs. pay for chores only vs. allowance as a budgeting tool.

Discuss on FaceBook.

Your Kid's Allowance Isn't Just About Spending: Family Finance Picks #66

2012-12-04T18:49:00.000-08:00

Typically, when parents hear “allowance”, parents think “spending”.

In the worst case, allowances fuel more spending. Thoughtless parents unconditionally shower bloated sums on their entitled kids who rush out to satisfy their “wants” on the latest consumer-driven fads. Instant gratification. Profligate spending. Ugh.

In the best case, allowances constrain spending. Modest sums are saved week after week by patient kids who deliberate over their eventual purchases, weighing the pros and cons of each. Delayed gratification. Disciplined spending. Good stuff!

But there’s another word I wish allowance would more readily evoke: “giving”. Allowance can be a great tool for introducing your kids to philanthropy, and cementing a lifelong habit of charitable giving. Here’s how you can get started today:

Pick a giving goal. Sit down with your child and pick a charitable giving goal that matches her interests and means. Need some ideas?

I’ve written about DonorsChoose before here. Your kids can help students in need by helping to fund projects posted by public school teachers across America.
Lots of FamZoo families recommend the microfinance non-profit Kiva. Individuals can lend as little as $25 to help create opportunity around the world.
Our kids recently pooled their charitable account funds and made a donation to Sandy storm victims via the Red Cross.
In Mark Hurst’s 2013 Gift Guide, I read about a more personal way to reach out to Sandy victims through the organization Family-to-Family.

Want more ideas? Check out pick #1 below.

Make a fund-raising plan. Help your child work out a gameplan to raise the funds for the donation. Here are a few ideas to mix ’n match: set aside a portion of allowance, tackle some odd jobs, hold a fund-raising event, or convince mom or dad to kick in some matching funds.

Track progress. Review progress each week with your child. Fine tune the plan along the way if things are getting off track.

Create a memorable giving moment. When your child donates her own hard-earned money to a cause, it invariably creates a strong sense of fulfillment and pride. It’s a powerful moment. Reinforce it. See picks #2 and #3 below for two recent examples of memorable giving stories involving young philanthropists.

#GivingTuesday: Ideas for Families

by Beth Teitelman & Fretta Reitzes on 92nd Street Y

There are lots of neat family philanthropy ideas in this article that came out as part of the #GivingTuesday campaign this year. Here’s what that campaign is all about:

#GivingTuesday™ is a campaign to create a national day of giving at the start of the annual holiday season. It celebrates and encourages charitable activities that support nonprofit organizations.

Related FamZoo Activity: Make a family charitable checklist for 2013.
Discuss on FaceBook.

Rochester Girl Spends Allowance on Statue for Vandalized Museum Garden

by Kristin Bull on Rochester Patch

I love this story about a 4th grade girl’s generosity with her allowance.

Discuss on FaceBook.

Put the ‘Giving’ Back in Thanksgiving

by Neale Godfrey on Huffington Post

A wonderful Thanksgiving story from Neale Godfrey showing how an allowance empowers a child to not only spend, but give.

Related FamZoo Activity: Split your child’s allowance as suggested by Neale.
Discuss on FaceBook.

When used properly, allowance can be a great tool for helping kids make a habit out of both disciplined spending and thoughtful giving.

Good luck and happy giving!

Transitioning Your Teen to a Prepaid Card

2012-11-28T18:46:00.000-08:00

Like every adolescent, your teen craves independence. And now your teen wants the freedom to make purchases on a credit, debit, or prepaid card. Yikes! Since your teen’s frontal lobe isn’t fully developed yet, you’re understandably hesitant about this next step up in fiscal responsibility.

How do you know your teen is ready?

If we were talking about a youngster learning to ride a bike, the answer would be simple: start with training wheels. That’s how we avoid lots of nasty bumps, bruises, or far worse. When it comes to kids learning personal finance, where are the training wheels? If we just turn our kids loose on bank accounts and credit cards without some practice beforehand, they’re going to get hurt.

In our teen’s case, the training wheels were accounts in our virtual family bank. It’s a way for kids to practice making real world spending, saving, and giving decisions while parents remain firmly in control of the actual purchasing.

Here’s how a virtual account works in a nutshell. Suppose my son wants to buy something. He checks the current balance in his virtual spending account. If he has enough, he comes to his family banker — me — and either asks for a cash withdrawal (the ATM model) or asks me to make the purchase on his behalf. After I hand over the cash or make the purchase, I subtract the amount from his account balance accordingly. On the deposit side of the ledger, his account is credited each week when FamZoo automatically delivers his allowance. That’s the personal finance “training wheels” system we’ve used over the past several years to teach him how to manage his own money and spend within his means.

So, now it’s time for the training wheels to come off. My son has proven he’s ready to start riding the purchasing bike without direct assistance. But, I’ll still be running alongside just in case. In other words, I want to retain visibility and some measure of control over his purchases. I also don’t want him to be able to spend more money than he actually has. And, lastly, as a teen, he’s not ready for a long term banking commitment yet — which is what signing up for a traditional checking account feels like. As a result, I’ve decided the right next step is a teen prepaid card.

Here’s how we’ve made the transition from a virtual spending account to a prepaid card account.

Step 1: Get prepaid cards for both of us. I want to minimize card loading fees and delays, and I know card-to-card transfers are typically free and immediate. So, I’ve decided to get prepaid cards for each of us. I’ll use mine as the “funding card” for my son’s card. I’ll load up my card every once in a while with relatively large sums of money. Then, I’ll periodically make “micro-transfers” to my son’s card for things like his modest weekly allowance, payments for odd jobs, and even “Bank of Dad“ interest payments to encourage good saving habits. Sometimes, the payments will actually flow in the opposite direction — from his card to mine — if he racks up a fine or reimburses me for a shared expense.

In our case, we’re test driving the new FamZoo prepaid card integration that allows us to manage and monitor a “family pack” of prepaid cards together through the familiar FamZoo user interface. We can keep using all of the FamZoo conveniences like automated allowance delivery, interest payments, auto-debits, checklists, budgets, etc, while turning our son (semi) loose with his own prepaid card. To get started, as soon as we received our prepaid cards in the mail from our partner TransCard, we activated them online from within FamZoo.

Note: we’re currently in private preview mode with our prepaid card family pack capability, and we’re shooting for making it generally available in early 2013. If you’d like us to email you as soon as it’s ready, just contact us on our site.

Step 2: Load up my parent “funding” card. For the first load of my parent “funding” card, I purchased a GreenDot MoneyPak at our local Walgreens. It cost me a flat fee of $4.95 to load up the MoneyPak. Then, from the GeenDot web site, I transferred the amount on the money pack to my prepaid card (no additional charge). It only took a few seconds online. (There are lots of other options for getting money onto your prepaid card — this just happened to be the most convenient option for me at the time.)

With our cards activated in FamZoo and the initial load completed, I can see the balances on all the cards in the family pack along with the transaction details for each. My son can sign into FamZoo separately and see the balance and transaction history for his own card right alongside the rest of his FamZoo accounts.

Step 3: Roll my son’s virtual spending account over to his new prepaid card. Since I’ll no longer be making purchases on my son’s behalf, the next step is to move the amount currently in his virtual spending account over to his prepaid card. First, I’ll initiate a card-to-card transfer from my card to my son’s card that is equal to the current balance in his virtual spending account. Then, I’ll zero out his virtual spending account since we won’t be using it any more.

With FamZoo, this was just a simple transfer action from my son’s virtual spending to his prepaid card. Behind the scenes, FamZoo performed the appropriate card-to-card transfer and debited the virtual account accordingly.

Step 4: Redirect my son’s allowance to his prepaid card. I still want to split my son’s allowance between spending, saving, and giving, so I’ll just redirect the spending portion to go directly to his prepaid card by pulling that amount off my card and transferring it to his card each week. For now, I’ll keep his saving and giving as virtual accounts. I’ll transition those to the real world later when he heads off to college and opens bank accounts — just like we did for his older siblings.

With FamZoo, I just edited my son’s allowance definition and switched the spending split over to to his prepaid card. Now FamZoo automatically delivers the spending portion of his regular allowance directly to his prepaid card by performing the appropriate card-to-card transfers in the background each week.

Step 5: Redirect my son’s shared expenses to his prepaid card. I still want my son to pick up his portion of the fees for some shared services he enjoys — like the monthly data plan fee for his smart phone. Those regular deductions used to come out of his virtual spending account. Now, I’ll just take the amounts off his prepaid card instead and transfer them back to my “funding” card.

With FamZoo, I just updated the account selected for each of his Auto Debits to be his new prepaid card account. Now, each time an auto-debit hits, FamZoo takes care of moving money off of his card and back onto my funding card. By the way, the same holds for the penalties we assess when my son blows off his expected chores, like making the bed. I just rewired each of the items on our “chore fail chart” to take money off his new prepaid card account instead of his old virtual spending account.

Step 6: Offer a special incentive to curtail spending. Unlike most card rewards programs, I’d like to provide my son with a little extra reward for not spending — in other words, a savings reward program instead of a spending rewards program. Specifically, I’ve agreed to pay him 0.2% weekly compound interest on the balance on his prepaid card. At the end of each week, I’ll calculate the interest on the current balance and transfer it from my card to his. Easy money! (And, no, you can’t join my Bank of Dad rewards program!)

With FamZoo, I just edited the optional savings interest rate settings on his prepaid card account. The payments are now made automatically each week using my prepaid card as the funding source.

That’s it. The training wheels are off! I have now transitioned my teen from a virtual spending account to his own prepaid card.

Let’s hope he keeps his helmet on!

Charting the Middle Ground with Kids and Money: Family Finance Picks #65

2012-11-19T17:13:00.001-08:00

Strong differences of opinion, extreme positions, insistence on “perfection” — they’re all classic roadblocks to progress. Just ask Congress!

Those classic roadblocks can get in the way of teaching your kids about money, too: strong differences of opinion between spouses, extreme controls on your child’s spending, a fixation on finding the perfect all-encompassing system.

How do you move beyond the roadblocks? Find some middle ground.

This week, each of my three picks illustrate the middle ground when it comes to some classic kids and money debates.

10 Popular Money Questions Answered

by Renee Morad on Money Talks News

Maybe your spouse feels strongly that an allowance is a terrible idea — a work ethic crushing entitlement! Maybe you, on the other hand, view allowance as a simple, effective tool for practicing basic money management habits like saving and resisting impulse purchases. Instead, your spouse wants to pay your child a “commission” for doing chores. How else will your child learn to appreciate that money is earned through hard work? But, you worry that paying for chores sends the wrong message about pulling your own weight within the family. After all, nobody pays you to make the bed or fold the laundry! Do you want your child demanding payment for every little request for help? Nope.

You and your spouse are at an impasse. You can’t agree on a system, so you continue to be ad hoc or even inconsistent with your child when it comes to money. With no reliable, predictable income source, your child has no opportunity to practice good money habits.

What’s the middle ground in this case? Perhaps Jack Otter, the Executive Editor of CBS MoneyWatch and author of the book Worth It... Not Worth It?, has the answer for you. In this article and short video, he handles a rapid fire pop quiz on 10 common money questions. Among them is the classic: “Kids, allowance or pay for chores?” His answer is short and sweet: a modest allowance coupled with pay for “big” chores that are outside the normal, expected household duties.

Related FamZoo Activity: Set up an allowance and a (big) chore chart.
Discuss on FaceBook.

13 Things to Teach Your Children that Will Make Their Financial Lives Easier

by Gary Foreman on US News Money

You’re disgusted with all the focus on consumption within our society. The thought of kids running around with the latest, greatest shiny techno-gadgets or trendy fashion items turns your stomach. And now your child announces she wants to save her money to buy that bleeding edge, “insanely great” tablet computer. Absolutely not! You’ll decide what’s appropriate for your child to purchase. Everything beyond that — money from birthday checks, odd jobs, you name it — goes right into to her savings account. No questions asked. After all, you know best from your own experience.

The problem is: by withholding all financial decision making responsibilities from your child, you’re robbing her of the most effective teacher of all: personal experience. It’s awfully hard to learn a skill without some of your own trial and error.

What’s a good middle ground solution here? Relinquish some financial decision making responsibility to your child, but couple it with some smart spending guidelines to ensure an appropriate level of frugality. That tablet for example? Fine — as long she purchases a gently used one. As Gary Forman, founder of The Dollar Stretcher, advises in tip #1 of this excellent article: teach your kids that “hand-me-downs” are acceptable. That will lead to smart money decisions later as a young adult, like buying used cars instead of new ones. Read the rest of Gary’s list here.

Related FamZoo Activity: Agree on a savings goal with your child.
Discuss on FaceBook.

MintFamily with Beth Kobliner: Allowance, “Modern Family” and My Family

by Beth Kobliner on Mint Life Blog

Budgeting is the cornerstone of personal finance. So you’re determined to teach your child that critical money management skill. Many experts recommend putting your children in charge of their own spending and tracking it relative to a budget. In a perfect world, that budget wouldn’t just cover pocket money for modest “wants,” but real world “needs” too: school lunches, birthday presents for friends, mobile phone charges, clothing, entertainment, you name it. And if your child mismanaged her budget? Tough!

In this article, Beth Kobliner describes why her “tough love” allowance/budget failed for her tween. She abandoned it, and went back to a nominal allowance to cover just miscellaneous “wants.”

That’s too bad, because I think there’s a middle ground learning opportunity in the real world “needs” budgeting department. There’s an approach that keeps things simple while retaining a little of the very effective “tough love” learning element. Just focus on a single, well-defined area of spending that your child truly cares about — clothing is a classic example. Work out a budget together focused on just that area of spending, allocate an allowance that matches the budget, and have your child manage spending within the budget. It’s far more manageable than an all-encompassing budget, and it teaches the basics of the skill effectively.

Related FamZoo Activity: Make and manage a clothing budget.
Discuss on FaceBook.

What's Best, What's Next for Financial Literacy?

2012-11-15T19:14:00.000-08:00

Many financial institutions consider it a core principle to improve the quality of life for their members and the surrounding community. Those efforts often revolve around member education, and naturally, the educational focus for financial institutions tends to be on financial literacy. With all of the challenges in the global economy, that focus is increasingly relevant and urgent. Ben Bernanke, US Federal Reserve Chairman, reinforces the connection when he says:

Financial education supports not only individual well-being, but also the economic health of our nation.¹

James Rajotte, Chair of the Canadian House of Commons Finance Committee, echoes the same sentiment:

I firmly believe that one of the key pillars of a strong Canadian economy is having a financially literate population.²

So the “why?” is pretty clear, as is the “when?” — that would be yesterday!

As for the “who?”, I’ve never heard anyone take issue with the old adage: “start early!” So youngsters are clearly a key part of the “who?”. And when money and kids are involved — regardless of what you’re doing in the schools to teach money concepts — you’ll need to involve the parents and guardians. Why? It’s about practice. Like any other skill, kids can’t master personal finance without practice. And, kids can’t practice personal finance without real money. Where do young kids primarily get their money? Their parents, of course. So, the parents need to be involved to make it all work. Even if we were to ignore such practical matters for the moment, it’s very clear that money and values are intimately intertwined. Just ask parents whether they care about how their kids earn, spend, save, and give their money. You’ll invariably hear passionate responses deeply rooted in their unique family history and values. Parental involvement in financial education is a moral imperative.

That brings us to the “how?”. How does a financial institution figure out what’s next and what’s best when it comes to financial literacy? The answer is research. Lots of research. Start by analyzing a large sampling of viable candidate solutions — say, 60 or more. Then, score each according to key criteria, like whether the solution is targeted, interactive, accessible, scalable, and effective. Finally, use that data to pick a handful of best solutions with the most potential.

Sounds like a lot of work, right? It is. But, here’s the good news: it’s already been done for you. All you have to do is check out the System Brief delivered this month by Credit Union Central of Canada. It’s called “Financial Literacy: What’s Best and What’s Next.” You can download it here.

Spoiler alert! FamZoo, our online and mobile application that helps parents teach their kids good money habits, is among the 8 selections for “What’s Best” culled from 67 candidates. And when it comes to “What's Next?”, FamZoo is among just three identified on the “Short Term” list as suitable for rolling out right away.

So, if you’re with a financial institution looking for what’s best and what’s next in financial literacy, we’d be delighted to set up a live, private online demo to show you how FamZoo works and how it can be customized for your institution. Just contact us here.

How to Create an Allowance that Splits by Amount Instead of Percentage

2012-11-14T12:23:00.000-08:00

If you use allowances in FamZoo, you’ve noticed that we let you automatically split the total amount between multiple virtual accounts. Each split is defined as a percentage, and together they must add up to 100 percent.

One of the reasons we use split percentages instead of amounts is because parents frequently make the allowance a function of their child’s age. (To be precise, FamZoo parents create age-based allowances 47.6% of the time.) If we have the splits defined as percentages, it makes it easy for us to automatically calculate the adjusted split amounts as your child grows older and the total allowance increases.

Percentages usually do the trick, but sometimes it just feels more natural to specify the precise amounts of each split. Michelle, a FamZoo mom, recently contacted us, and eloquently explained it this way:

It would be nice to have a type of allowance that wasn’t divvied by percentage but by dollar amount. In other words, at the moment we give our daughter $3 for long term, $2 for short term, $2 for charity and $2 for float (which she decides where she wants it). It would have been nice to add her allowance that way instead of having to muck around with the percentages to get it to work out evenly (33.34%, 22.22%, 22.22%, 22.22%). It’s not that it was hard, just a bit tedious. I understand if you want to have a standard split rate for other deposits that the percentages would be good, but it would also be nice to have a type where you can just put in the dollar amount per account. It obviously would only work for an allowance that doesn’t change (very often) vs an ad hoc new “contribution.” It just would be nice to have that option.

Well said Michelle, and it’s something we’ve added to our feature candidate list. In the meantime though, it turns out there is a way to simulate a regular allowance with fixed amount splits using a FamZoo Checklist. Here’s how you do it:

Step 1: Create the accounts. Click on the Create Account link (found on the Overview page or the Accounts page of the Bank tab) to get to the Create Account form. Fill out the form for each account to which you’d like to distribute allowance amounts. In Michelle’s case, that’s three accounts: one for long term saving, one for short term wants, and one for charity.

Step 2: Create a checklist. Click on the Create List link (found on the Overview page or the Checklist tab) to get to the Create New Checklist form. Name the checklist something appropriate like “Allowance,” and be sure to check the box to allow the assignment of rewards to items on the list.

Step 3: Create a checklist item that delivers the allowance. Click on the Add Item link to add a new item to the list.

Name the item something like “Allowance Payment.”
Pick a start date that is one day before the desired delivery date.
Select the repeat options to match how often you’d like the allowance delivered.
Set the Expires setting to be 0 days after the due date so that this repeating item will always automatically expire immediately after its due date.
Add a reward entry for each split that indicates the target account and associated dollar amount to be delivered by the allowance. Make sure that you have when item expires selected for each reward entry.

That’s it. Now, whenever the repeating item expires, the allowance amounts that you supplied in the rewards settings will be automatically delivered to each account.

Now what about the $2 “floating” amount that Michelle’s daughter gets to assign to the account of her choice? I’d recommend setting that up as an additional repeating item on the Allowance checklist with a single reward of $2 to the desired account. I’d also set up a reminder on the repeating item. It serves as a prompt to ask your child whether she’d like to change the current account assignment for the floating component of the allowance. If so, just edit the floating checklist item, and update the account pull-down in the Rewards section accordingly.

Once you’ve got this setup, here’s what the payments will look like in your child’s Transactions page:

For the step-by-step instructions in pictures, check out this slideshow.

Questions? Don’t hesitate to contact us.

The Three Best Ways to Teach Kids about Money: Practice, Practice, Practice. Family Finance Picks #64

2012-11-12T17:26:00.000-08:00

Practice, practice, practice. Everyone agrees that kids need lots of practice to master a skill, right? Whether its sports, academics, music, you name it.

So why not give your kids lots of practice when it comes to the critical life skill of managing their own money? Without it, your kids are headed for trouble. Kids can’t fully develop personal finance skills by playing games or by having you make all their financial decisions for them. That’s like expecting your child to become a great hockey player by playing an online hockey video game or just watching you skate around the rink.

So, where do you start?

To practice, kids need some real money of their own. Don’t get too bogged down in classic allowance vs. paid chores debates when it comes to determining your child’s source of income. Just pick an income source and amount that makes sense for your family’s situation. Then, give your child the freedom and responsibility to make regular spending, saving, and giving decisions with that money — within some minimal set of basic boundaries that you establish.

Through repetitive trial and error along with your guidance, your kids will develop the skill of making wise money decisions.

Practice makes perfect — or, at least proficient.

With the “real world practice” theme in mind, here are the family finance picks of the week:

Why Monopoly Is A Terrible Finance Teacher

by Amy Fontinelle on Investopedia

A bit of a “party pooper” post from Investopedia about Monopoly, but a good reminder that the best games are designed first and foremost to entertain. To really learn something, like personal finance, nothing rivals real experience. It’s all about (real) practice.

Discuss on FaceBook.

Websites Encourage Kids to Learn about Finance Online

by Dan Bobkoff on Marketplace Money Matters

FamZoo Mom, Suzanne Skyvara, was back on public radio again last Friday in this longer four and a half minute interview segment — an expansion of the original shorter broadcast here. Suzanne describes how FamZoo helps her kids practice making financial decisions like the trade-off between spending extra money on a soda now versus saving it toward a video game purchase later. The experiential learning includes living with the consequences of truly bad decisions, too: like losing $10 to your brother over a spontaneous bet about the name of a video game. Oops.

Related FamZoo Activity: Review your child’s financial decisions with them each month.
Discuss on FaceBook.

How Much You Should Pay Your Kids For Allowance

by Ryan C. Fuhrmann on Yahoo! Finance

Ryan pens a solid, and pretty typical, article on allowance basics. He wades into some of the classic debates such as whether or not to pay for typical household chores. The gold of the article is all in the “Bottom Line” section at the end. Ryan reinforces the notion that the true value of an allowance is creating an environment in which kids can practice making financial decisions. That’s nicely captured in the classic allowance-amount axiom that Ryan highlights:

A child’s allowance should be enough to allow them to buy something small right now or save for something big later on.

Related FamZoo Activity: Help your child track progress on a savings goal.
Discuss on FaceBook.

Teaching Kids About Money: Heather Wagenhals Interviews Bill Dwight on Unlock Your Wealth Radio

2012-11-07T21:06:00.000-08:00

Recently, I had the privilege of joining Heather Wagenhals on her Unlock Your Wealth radio show. Heather is a personal finance columnist, author, and radio show host who focuses on financial tools designed to help everyone manage their finances and attitudes for the dual purpose of achieving financial wellness today and financial independence for the future.

In this 26 minute interview, we cover the following topics and more:

How financial literacy is much more than just knowledge.
How a virtual family bank works and gives kids hands-on experience with money decisions.
How technology can make mentoring easier for parents and learning more engaging for kids.
How to let kids learn through "failing."
How to get 6 months of FamZoo for free through the end of November.

You can listen to the recorded interview here or read the transcript below.

Listen to internet radio with Unlock Your Wealth on Blog Talk Radio

Heather: Greetings everyone. Welcome to the broadcast. You are listening to Unlock Your Wealth Radio with Heather Wagenhals. I am she, your hostest with the financial mostest, guiding you through the murky money waters into the promised land of wealth and happiness helping you get your money mind right so that wealth and happiness can follow, and we do that each and every week right here at unlockyourwealthradio.com. We are so glad to have you. We are beginning our 5th key in our Keys to Riches Financial Wellness Series this week, and that is, "Take Emotion out of the Picture". In this episode we are going to learn how we can keep our passions in perspective when we make financial decisions.

Also coming up on today's show we have special guest Famzoo.com creator, Bill Dwight, joining us to talk about kids and money management tools that you can use to help teach them how to be good stewards financially so they won't have a need for this radio show when they get older. That's one of the things that I'm trying to create, obsolescence with my radio show by sharing how we get our money minds right, and we do that each and every week with our Keys to Riches Financial Wellness Series. For those of you who are joining us for the first time, welcome to the broadcast. We're so glad to have you.

The Keys to Riches is simply a bakers dozen of financial concepts that I designed to help you get out of your own way when it comes to managing your money. We're going to learn more about this week's key and how it fits into the bigger picture, and specifically why this key is so important to you because as we say at the beginning of our show, it's about getting your money mind right.

Why do we say that? Well, it's simple. It's because we all know to spend less and save more, but we don't. Why is that? Because when we say it's all about the money, it's actually not about the money. We're going to learn about that today and how emotions are connected and how we can work to overcome those. And so, we'll do that on today's show. I'm so excited.

Let's get to our guest shall we. The Famzoo website is pretty amazing. Bill Dwight created this website because of a personal reason. A father of five was looking for a way to teach his kids about money. He designed this really incredible way to do that. But I'm going to let him tell you about that because his story is so unique.

I really haven't featured a whole lot of money management tools. We've have Sharon Lechter on with her kidpreneur program, but how do we take whatever we decide as our money teaching tools for our kids and translate that into something that is simple and easy for us implement that we can be - the key - consistent with. Because consistency in our children is super important because they're hawks, and they will hold you accountable. All you have to do is goof up once with the kids and they will be all over you. "But Mom, you said..." or "Dad you said...", and all it takes is one time to make a mistake, and if you're too tired, or too busy, or your system for teaching kids is too complex, you're going to get hung up in that. So, I am so excited to have a conversation with Bill Dwight.

So, let's get started shall we. Welcome to the show Bill.

Bill: Hi Heather. Thank you for having me.

Heather: I'm so excited to have you on the show today because one of the things that is so important to me is the right programming, and for those who are regular listeners understand this all too well because they're busy smacking their forehead, "If only my parents would have programmed me right," because what they find out when they start the process of financial literacy is it's more than just financial literacy. It's about health and wellness both mentally and physically, and they realize that a lot of the things that they do are just simple little injunctions that seemed innocuous at the time as a child that have deeper ramifications, and you have one of the neatest solutions I have seen so far regarding educating children.

Bill: Well, thank you. I mean, you have this quote on your about page where you say, "Knowledge is superfluous without application." I think that is so relevant here because kids really need to practice personal finance to get these habits down. My wife and I have five children, so we've kind of been through this a couple of times, and we were really struggling to find something that would allow kids to practice personal finance on a regular basis versus just talking to them about it, or a piggy bank kind of runs out of steam real quick.

I mean, kids are super smart and they catch on really quickly. They can really deal with a lot of pretty sophisticated financial concepts. But banking products really aren't appropriate for them, because they're not there to help you make mistakes - they profit from mistakes. So, that's kind of how FamZoo came about. It was my quest to find something I could use with my kids to give them a lot of hands-on practice.

Heather: Yes, when I was young I had my own little business, and so I did have a checking account for my lawn mowing service and I had Holly Hobby checks.

Bill: That's awesome.

Heather: All I wanted to do was write them though. My mother kind of ultimately controlled the purse strings on that because I was a familial contributor as a child. So I had an unusual financial experience, but for kids that come up with parents that maybe didn't have stuff and they want to give their kids the world, they want to make it easy on their kids, it's not always the answer and sometimes lifestyles, these middle class and moderately affluent lifestyles just don't permit the opportunity to teach kids about personal finance. How does Famzoo work?

Bill: Well, the way it works is basically the parent sets up a bank. So, from the kid's perspective, they have an online bank, and mom and dad are the "bankers." It sounds a little complicated, but actually the whole point is to make it really super simple. So, from a kid's perspective they have an online bank account which shows them their balance - how much they can spend, or how much they've saved or whatever - and then the parents are the ones who are putting the deposits in whether it's allowance, or chores, or work outside the home.

To me, the really important thing is that a kid has some money that they are making spending decisions over. There is lots of interesting discussion about do you do allowance, do you do chores or whatever. We support any of those models that are appropriate. You decide for your family what's appropriate, but the key thing is: the child is deciding whether or not to spend or purchase something using their own money and living with the ramifications of those decisions. That's such an important practice. They need to make mistakes early on.

Heather: Yes. I think about the motto of "fail early and fail often" in order to get your feet underneath you, and I like that it allows them to do that. When you first started this, what were family's initial responses to the website? I know you're an award-winner. You've gotten Finovate's Best of Show. What was the initial response from parents when you started your website?

Bill: Well, it's kind of new. We are really a pioneer in this area, so the concept is kind of new, so often the response is "I don't totally get it, walk me through it." So, when we walk people through it and say "oh, see, like if your little kid finds a quarter in the sofa because the 49ers finally won and some change fell out of your pocket, they can bring it to you and say, 'Dad, put this in Famzoo for me.'" So, I, being the banker, take that quarter, and I credit their account.

So, the kid gets used to managing their money as a number, as a balance on the website. Then when we're at the store, and your kid is at the checkout stand and thinking "hmm, I would really like those jelly beans or that gum," instead of just nagging you and screaming and crying about it, they'll say, "hmm, what's my current balance in my account?" You whip out your cell phone and check it and say, "Oh, you have $3.50." Then they decide whether they want to make that purchase. After they make the purchase, you debit the account accordingly.

So, this works really well with young kids who don't necessarily have their own debit card or whatever. They might not be ready for that. We use technology to make this super simple and engaging for the kids. That's the key thing. Kids are really wired up really young these days, so there is this opportunity now to use mobile and web technology to make it super, super simple for parents who are insanely busy to run a little more systematic online bank for their kids and not be so ad hoc with money with their kids.

Heather: I think that you are totally going in the right direction with the technology idea, and I have some more questions for you about the technology angle, but first we need to hear a word from our sponsors. You are listening to Bill Dwight on Heather Wagenhals' Unlock Your Wealth Radio, and we'll be right back with more coming up after this.

Heather: Welcome back to the show everyone. You are listening to Bill Dwight on Heather Wagenhals' Unlock Your Wealth Radio, and Famzoo.com is who we're talking about, or specifically what we're talking about on today's show. Bill, I think that you brought up such a great point about being at the checkout and having the phone app there to be able to check the child's balance because one thing that I've noticed, and I was having a conversation about a financial literacy program I'm facilitating for another organization, is that they said they were sitting there with their grandchild and they were talking about money and something, the cost, and the kid wanted to go do something and they said to the grandparents, "Well, just go to the machine that spits out the money." And, we get hung up in teaching our kids about dollars and cents in the physical paper sense, but our children aren't growing up in a paper money world.

Bill: Yes, and parents have this interesting fear that if they don't use real coins and real dollars (or physical, I shouldn't say real - physical coins and dollars) that their kids aren't going to get it. In fact, I think the important thing is that kids understand that a balance - an online balance - is a real sum because this is how young adults and kids get themselves into real trouble. They don't perceive that as real, and so the neat thing about a program like Famzoo is that kids gets in the habit of online banking and electronic money and realizing that that's real money making real purchases, has a real impact on sort of their overall net worth, and they're basically getting a primer for online banking and an electronic purchasing world through the product.

Heather: Yes. I really like that aspect about what you've done, because when we get taught with paper money, and that's precisely why casinos give you chips instead of money.

Bill: Yes, absolutely. The paper is fine. That's just like I carry around a wallet that has paper currency in it, but I also have a bank account. So they need to look at the whole picture. Why would we just show them part of the picture?

Kids are very savvy. I just had a conversation on the way to school with my 10-year-old just last week about how a credit card works. They can get all these concepts. He asks, "Dad, why does the noodle shop only accept cash?" So, we've even talked about things like merchant fees. And you know what? He totally gets it. I'd like to think of course my kids are little Einsteins, but he's just a normal little 10-year-old. If you take the time to explain these things, and they get lots of practice along the way. They can completely get this stuff. I think if every 10-year-old sort of understood right away how a credit card works and how electronic money works, I think we'd be better off.

Heather: I agree. Now, you mentioned letting kids make mistakes. How can a parent use this as a teachable moment? How do you let them fail with your system?

Bill: There are so many great examples. I think one of my favorite examples is when kids get in the tween stage typically they have an area of spending that they're very passionate about. My daughter was very passionate about clothing. Now she's 22, but at the time we basically said okay, here's what we're going to do. You make a budget for the year for your clothing, and that's very instructive because kids realize "wow, this really adds up to a lot of money!" What seems like a pretty reasonable budget is actually an astounding amount of money, right?

So, we gave her an annual allowance that equaled that clothing budget. Then we said, "You know what? Now you make the spending decisions." So, she had separate accounts in Famzoo. The neat thing about Famzoo is you can set up any number of accounts and allowances and stuff because there are always different kinds of scenarios. So, she had this clothing account, and she was making her own spending decisions, and then halfway through the school year her boyfriend asked her to the prom, and she decided that she absolutely had to have the Neiman Marcus iridescent chiffon gown. It completely torched her budget.

Instead of nerdy dad giving her a lecture about how she was going to regret that or whatever I said, you know I gave it the old college try, "You probably won't wear that again." "Yeah, right, whatever dad." So, she purchased it, and I said "as long as you stick by the contract of sticking by the budget." So the wonderful thing was, she purchased it and then she had to go cold turkey on clothing for the last 4 months of the school year. That was a far more valuable lesson for her, something that really stuck with her, versus me arguing with her about it.

So, the neat thing about numbers and keeping track in an account like this and having the child make the decisions, even making the budget under your guidance and so forth, and then tracking their own spending is: They feel in control. They feel empowered. When they make mistakes they own up to them because it's their decisions. It's a lot less emotional. If you've ever had teenagers in your life, you know you don't need additional emotion. If you can have a system that helps teach them it also reduces friction. That's a win-win.

Heather: Agreed. I remember being a teen, and I remember all of the friction. A question for you. Can you share with us a success story from one of your website participants?

Bill: Absolutely. What is always a success story to me is when a family finds an incredibly creative way to use it. We found that so many families are different - we've worked with, thousands of families over the years now. One of my favorites is the mom who set up this chore chart system where, if the chore expired, she credited this special account called "The Money You Could Have Earned."

Heather: Oh man! What a great idea!

Bill: Every month, when the kids would blow off their chores or whatever, she would roll out their account and say. "See, this is the money you could have earned." I thought that was such a clever usage of our system because we had never envisioned that, and she was able to put that together. So, we're all about matching our system to your values. Money and values are so intimately intertwined.

We're not here to tell you what your money values are. We're here to give you a helpful tool that keeps you on track. So many parents start something and then it falls by the wayside 2 months later or whatever because it was too hard to keep up. Life is busy. Parents are busy. So, the whole thing is: maybe we can use technology to keep things rolling in the background while you're busy and diverted and it will be there for you in your next "kid financial crisis." So, that's where technology really comes in to help.

Heather: Yes. What a better... I can't think of a better way to illustrate the economic theory of opportunity cost.

Bill: Absolutely. And that runs in an automated fashion in the background. She didn't have to do anything. She just rolls it out each month. So, we're always looking for ways that we can use technology to simplify and automate stuff that basically lowers the bar for parents to be good money mentors. That's the whole goal of Famzoo.

Heather: Yes, because as listeners know who are working to create their own financial wellness and overcoming all of those limiting beliefs they gathered as children, this is one really elegant streamlined way that I have explored personally to figure out how you can seamlessly integrate it in your life without having to sit down and create this monthly lecture, or having to have a structured learning plan. This is an actual, an experiential teaching device.

Bill: Yes. If you have to work hard, that's a real impediment to them following through, and also a lot of folks are anxious about their own money habits, right? The neat thing is that technology can help you feel less anxious about that. The technology is kind of helping you enforce these good habits, and you don't have to be perfect yourself. The neat thing is when parents work with their kids, they also clean up their own habits.

Heather: Yes. I was going to say I bet that it has a reverse effect because now they're wanting to walk the walk, they're wanting to walk the talk. This has been an incredible discussion with you today, and I'm so delighted that you wanted to be a part of our show. And, in addition to being a part of our show, you also have a special offer for Unlock Your Wealth Radio listeners.

Bill: Yes, we do Heather. It's a coupon code that you can enter when you register your family, and it's... (Whoa, not so fast! You'll have to listen to the broadcast!) That will give people a 6-month free trial which is 4 months beyond our typical 2-month free trial. Hopefully that will be more than enough time for parents to figure out "hey, does this work for my family and does it help me out?"

Heather: I think that that's a super offer, and I hope our listeners take us up on that. I am just so grateful that you stopped by to help us learn how to have another resource to educate our children better and for free. For those of you who are driving around never fear, unlockyourwelatheradio.com is here, and that's where you can go to find the coupon code and the link to Bill's website. You are listening to Bill Dwight on Heather Wagenhals' Unlock Your Wealth Radio.

Real Dollars, Real World, Real Lessons: Family Finance Picks #63

2012-11-05T23:07:00.000-08:00

Keepin’ it real with this week’s three picks:

No More Impulse Buys: How To Teach Your Kids About Money

by LearnVest Contributor on Forbes Woman

LearnVest interviews Ron Lieber who makes several excellent, practical comments about allowance in this Forbes Woman article. His key points include:

wants and needs are a continuum worthy of ongoing conversation,
the importance of giving kids the power to make their own decisions and the responsibility of living with the consequences,
how a simple allowance for wants can eliminate toy-aisle meltdowns, and
how to neutralize materialistic peer pressure.

My favorite quote from Ron is: “There is nothing like real dollars in the real world to teach real lessons.” Indeed!

Read the rest of the article here.

Related FamZoo Activity: Set up a modest allowance to constrain your child’s wants.
Discuss on FaceBook.

Kids and Money: How Young Is Too Young?

by Gail Johnson on Yahoo! Finance Canada

Here’s a solid article on teaching young kids about money with one caveat. At the end, Gail recommends: ”Get a piggy bank, as it’s a tangible way for little kids to understand money and saving, as opposed to an offsite, virtual account.“

I think a physical piggy bank is a great start, but the sooner kids understand the concepts of online banking and the fact that a balance in a statement or on the screen represents real money, the better. They’re growing up in an increasingly online world and need to understand how to handle all forms of money — from physical to electronic. We’ve found that kids as young as 4 or 5 easily grasp the concept of online banking — kids are pretty darn smart these days, they just need a little explanation and lots of practice making wise money decisions.

Related FamZoo Activity: Set up a virtual family bank.
Discuss on FaceBook.

An Economist’s Seven Rules for Raising Kids

by Gertrud Fremling on Fox News

Gertrud Fremling, a PhD in Economics and a Mom of 5, shares her 7 economic principles for teaching her kids good habits. There are some clever and perhaps controversial ideas here — maybe keeping it too real for the kids? Keep in mind that economics is nicknamed the “dismal science”:

No allowance, minimal TV, tightly restricted video/computer game time
Pay for household jobs
When multiple siblings want same paid job, hold a reverse auction — lowest bidder gets the job
Let kids propose their own jobs
Allow siblings to rent items like games and toys to each other
Have long term contracts for things like agreeing to take care of a pet if purchased by parents
Impose fines for violations like swearing or hitting a sibling

Read more about Gertrud’s 7 rules here.

Related FamZoo Activity: Set up an online chore chart.
Discuss on FaceBook.

Using FamZoo with Parental Controls

2012-10-30T16:02:00.000-07:00

Many of our families use some form of parental control software to help ensure a safe browsing experience for their kids. The most common examples include Safe Eyes and Mac Parental Controls. In some cases, you’ll need to explicitly enable access to more than just the main FamZoo site to get things to work properly. For example, you may notice that your kids cannot check off items on their checklists when the parental controls are in force. If you’re seeing problems, try adding each of the following web addresses to your list of explicitly enabled sites:

www.famzoo.com - this is where our public pages (like our home page) reside.
app.famzoo.com - this is where our private application pages (like your family’s Overview page) reside.
ajax.googleapis.com - we rely on some nerdy external files (javascript libraries, CSS files, etc.) to run our application. The files come from this Google server.
1e100.net - similar to the entry just above, it turns out this is also a Google address. (Talk about nerdy, the name refers to the scientific notation for a “googol” which is 1 followed by a hundred zeros. For the super curious, you can find more info on how Google uses this domain here.)
www.google-analytics.com - we use the Google Analytics service to keep stats on which pages in our application are being used most frequently. Its files come from this server.

Note that if you sign into FamZoo as a parent, we’ll often show our latest FamZoo Facebook activity in the right hand side bar. (We never show it to kids who are signed into FamZoo.) Usually, the sidebar item will just show some message about it’s content being blocked, but we have seen this interfere with the proper loading of the page in some browsers. In this case, you may have to access your parent FamZoo account from outside your parental controls or from within a parental control account that does not have Facebook blocked.

If you add the sites above and still experience problems using FamZoo with safe browsing software, please contact us. We’ll help you get to the bottom of it.

Book Smart vs Birds, Bees, and Bank Smart: Family Finance Picks #62

2012-10-29T18:43:00.000-07:00

It’s all about the B’s this week: books, birds, bees, and (virtual) banks.

Highly Educated Have Biggest Debt Problems

by Dan Kadlec on Time Business & Money

It seems logical that the “highly educated” would have a leg up when it comes to managing their money, right?

Wrong. Don’t confuse “book smart” with “money smart.” One definitely doesn’t imply the other.

Dan describes a recent study showing that “highly educated Americans were most likely to take on unmanageable debt in the pre-crisis years.”

Read about it here.

Related FamZoo Activity: Make sure your child is money smart, too. Start a virtual family bank.
Discuss on FaceBook.

New Sex Ed Program Focuses on Personal Responsibility

by Lindsay Fiori on Journal Times

It’s been said that the money conversation with kids is harder than the sex conversation for parents. Awkward!

Lindsay writes about a new Personal Responsibility Education Program for 10 to 18 year olds that attacks both birds with one stone. Perhaps a super clear picture of what it really costs — both actual costs and opportunity costs — to raise a baby will help the decision making in those under-developed teen frontal lobes.

Read about the PREP program here.

Discuss on FaceBook.

A Virtual Bank for the Kid’s Allowance

by Dan Bobkoff on Marketplace Money Matters

Last month, the New York Times picked up the virtual family bank story. Last week, it came to public radio. Kai Ryssdal, host of the popular Marketplace radio program, describes how Suzanne Skyvara and her husband use a virtual banking site to teach their kids good money habits.

Guess which virtual bank site the Skyvaras use? That’s right: FamZoo. Woot!

At the end of the segment, Beth Kobliner asserts that virtual family banks will just cause kids to spend more, not less.

Interesting.

In the comment section of the online article, Suzanne responds directly to Beth’s concerns. She writes: “Our experience has been the exact opposite. Our kids — who are featured in this story — actually save a lot! They have specific accounts they have set up to save for big ticket items (like a computer), for college and also for charity donations.”

Suzanne’s experience matches what we’ve heard from other FamZoo families: once kids start managing their own finite pool of money and making specific savings goals, they tend to become very frugal. They’ll voluntarily cut out miscellaneous purchases that are not aligned with their goals. An excellent unsolicited example we received illustrating this effect can be found here.

Of course, unlike some other sites, we don’t marry our virtual family bank with a storefront. Perhaps that was the crux of Beth’s concern.

Listen to the Marketplace podcast or read the transcript here.

Related FamZoo Activity: Set up a savings goal.
Discuss on FaceBook.