Gather Little by Little

Last week, I had the privilege of being given a personal tour of FamZoo by the creator of the site, Bill Dwight. Bill has been developing the software and concepts behind FamZoo for most of the decade, however the site just went live in January of 2010.

I am going to be really honest here. There are lots of people out there with all kinds of ideas about how to make money or deliver services or simply pursue a mission on the internet, so I was skeptical at first. After fifteen minutes of going through the site, I was really excited about what FamZoo can do for parents who truly desire to train the financial habits of their children. I cannot do justice to the site in just one article, but I am going to do my best to summarize the service and then list specific problems that FamZoo can help you to address.

I first assumed that FamZoo was similar to mint.com, where participants are given a snapshot of their real finances after allowing Mint access to bank and credit card information. This was an incorrect assumption. FamZoo is not a bank, there is no money to deposit, and really no exchange of private information. FamZoo is a tool for teaching children how to manage money in the twenty-first century – a website that helps your children see the consequences for financial decisions.

I just signed my family up for FamZoo. I have a “master” account – and Mrs. Stew soon will have one as well – FamZoo calls it the Spend-Save-Give Plan. My children each have the Starter Plan, a basic, simple account that is easy to understand. Other accounts include the Allowance Plan and the Teen Budget Plan. I believe that FamZoo works best for pre-teens and teens, however, small children like mine can certainly benefit. With my Spend-Save-Give account, I can set up a regular allowance to be deposited into the accounts of each of my children. We then work together to decide how best to use that allowance. When your child spends or receives money and records it in FamZoo, the transaction is instantly reflected in his balance. Each member of the family has his own log-in and can easily view his financial situation anytime.

The possibilities for FamZoo really are endless. The site works for the most simple of financial arrangements to more complicated budgeting plans. Some parents use FamZoo to motivate children to save money, some to save for a “want”, others us the site to administer discipline, such as fines, instead of grounding. Bill gives his older teens a yearly clothing allowance that they can spend any way they like, except there are real consequences for spending choices.

Now, it is important to remember that the money in FamZoo is theoretical or as Bill calls it, “cashless”. As the holder of the Spend-Save-Give plan, you can easily see the total value of the FamZoo accounts, i.e. if you have been giving an allowance of $10 per week to five children, the accounts will have a total value of $150 after three weeks, minus spending, giving, etc. However, you need to make sure that you have a way to access that cash when your children decide to use it. FamZoo decides how/when/where that money will be spent according to the budget that you and your child set up, but is up to you to decide how to handle the moment when your child comes to you and asks for the money that he has saved through his FamZoo account. Personally, I am going to set up an ING Direct sub-account that reflects the total amount of money that I have given to my children through FamZoo. When my child wants to spend some of the money, I will give cash or use an ING debit card. Other possibilities include simply backing the FamZoo account balance with cash, using a credit card or even giving your child a pre-paid teen credit card where you load the card every month.

I do not have time to discuss all of the features that FamZoo offers: complete automation, pleasing graphics, mobile text commands, checklists that can be tied to financial penalties/rewards, savings goals, a spending record that goes back years – all within one website. Those are the details. Here is what FamZoo can do for your family:

FamZoo will help wealthy parents teach good money management

I work with college kids and one of the greatest tragedies that I observe is parents who, out of love, have worked hard and saved in order to give their children a good life, but instead end up severely damaging the financial development of those children. Children grow into young adults without learning how to make decisions regarding spending priorities, without ever seeing a budget, without every seeing a credit card payment or saving for a goal or participating in financial strategic planning. FamZoo can solve that problem. Parents who want to share financial blessings with their children, can do so and still provide financial training to those children.

FamZoo will provide financial consequences in a safe environment

If your child breaks a window through carelessness, you can deduct that money from his account. This teaches him there there are financial consequences for carelessness, but that lesson is in an environment where his needs are still cared for. It is better that he learns this lesson at age 14 and his FamZoo account goes into negative territory than ten years later when he burns down his apartment because he is shooting bottle rockets out the front window. FamZoo can teach your child to think more carefully about every decision.

FamZoo will prepare your children for a cashless, digital society

We all know that one of the best ways to exercise financial discipline is by going to a cash-only budget. This works very well for those of us who grew up in the 20th century. The problem is that we are quickly approaching a time when this will be impractical. FamZoo can help to introduce your children to the skills and concepts necessary for keeping track of spending digitally, using an online bank, handling passwords, etc. and adhering to a budget without cash. Learning to exercise discipline with cash is a very good thing, but what if you could teach your children the benefits of financial discipline while using a credit card?

FamZoo will make financial decisions less personal

Do you have a child who can talk you out of more money than another child? Are you always trying to even things out? Do you have a child who will throw public temper tantrums if you refuse to buy him the latest toy? Do you have a child who gets the short end of the stick because they spend money wisely and simply do not demand as much? FamZoo will give you the tools to resist impulse buys and help your child adhere to the budget that he set up. FamZoo will show each child that he is being treated fairly and his lack of cash flow might be due to his own carelessness . . . not his ogres-for-parents.

I highly recommend FamZoo as a great tool to teach your children about money management. FamZoo is a subscription-based website, so there is a fee of $5.99 per month. Bill Dwight initially considered offering the service for free and paying for it via the usual methods – advertising and referrals, but he knew that sometimes we humans do not value the things that cost us nothing. In a way, by offering FamZoo at a cost, he is forcing us to place a value on providing financial training for our children. I believe that $72 a year is a bargain for this service. It is important to know that there is a free, two-month introductory period so you have some time to test out the site, risk free.

FamZoo will help you teach financial self-control to the wild animals living in your house.

Article by Stew

Photo by FamZoo