Really? What is that? How does it work?
UPDATED 7/1/2013: When this post was originally written, FamZoo only supported IOU accounts which are described below. Since then, we have added support for prepaid card accounts so that real money can back each account and your child’s purchases can be automatically tracked. Now you can run your family banking system on either IOU accounts or prepaid card accounts — or a combination of the two. Click here to learn more.
Here’s how virtual family banking with IOU accounts works: Let’s say that your child, right now, has $30 in change in her piggy bank on her dresser and another $20 in birthday money in an envelope in her desk drawer. She hands you the actual money, and you, in turn, credit her FamZoo IOU account for $50. Congratulations! You’ve just become the “Bank of Mom/Dad,” and you’re now running your own virtual family bank. It’s still her money, but she’s just deposited it with you. She can see how much see has in your safekeeping at anytime by signing into FamZoo and looking at her IOU account balance.
Later, suppose you’re out with your child shopping, and she wants to buy something that you’ve decided she should pay for. You pay for it — cash, check, credit card, whatever works for you — and debit her FamZoo IOU account for that amount. She has effectively made a withdrawal and payment from her account at the “Bank of Mom/Dad.”
If you choose to give her an allowance (your call!), you can set that up to be automatic in FamZoo. You may even choose to have the amount split between multiple accounts — like spending, saving, and giving. You don’t have to remember to hand her cash every week; FamZoo will automatically deposit the amount you specify into her FamZoo accounts. Alternatively, you may choose to pay for regular chores, or just occasional “jobs” like babysitting, or maybe some mixture of those things. It’s your bank, your family, your values. You decide what’s appropriate. You make the rules!
The bottom line: balances in her FamZoo IOU accounts represent IOUs from you to her. You’re holding her money for her, just like your bank does for you when you deposit money with them.
Make sense? Don’t hesitate to ask questions! Leave a comment. We always love hearing from you.
When you’re ready, try setting up your own online virtual family bank on FamZoo. It’s a simple, safe, effective way to teach your child good personal finance habits through hands-on practice. You can try it FREE for two whole months — plenty of time to see if it works with your family. We don’t require any payment info up front for IOU accounts. Interested? Sign up here.