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What is an Online Virtual Family Bank? How Do FamZoo IOU Accounts Work?

FamZoo's Online Bank Of Mom/DadFamZoo is an online “virtual family bank.”

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.


8 comments:

Unknown aka The Blog Post Author

how long does it take to load deposits to the child's card?

Bill Dwight aka The Blog Post Author

You can transfer funds from your parent funding card to your child's card instantly using the FamZoo app(lication). The time to load funds onto your parent funding card vary depending on the load option chosen. You'll find the load options listed here: http://blog.famzoo.com/p/load.html

Marc and Lisa Sheppard aka The Blog Post Author

Can you have a mix of IOU accounts and pre-paid card accounts within one family?

Bill Dwight aka The Blog Post Author

Yep, you can mix'n match IOU accounts and prepaid card accounts within a family and within a given member's accounts. For example, a child might have a spending card and an IOU account with a negative balance that represents a loan outstanding for a smartphone. Or, a parent may choose to represent the savings buckets as IOU accounts because they choose to manage the actual dollars saved elsewhere outside FamZoo. The single subscription fee covers either or both types of accounts.

Kbburl aka The Blog Post Author

How do you delete IOUs? My son lost his card and we replaced it, but the automatic deductions were still posting to the lost card account.

Bill Dwight aka The Blog Post Author

You can cancel/adjust prepaid card IOUs as follows:
http://blog.famzoo.com/p/famzoo-card-faqs.html#cancel-iou

Unknown aka The Blog Post Author

How do I transfer money from the funding account to the child's IOU savings account?

Bill Dwight aka The Blog Post Author

You can't transfer money from the primary funding card to an IOU account because IOU accounts don't hold actual dollars, so there is nowhere for that money to go. Instead, you probably want an additional card to hold your savings. Here are the rules for transferring between IOU and prepaid card accounts: http://blog.famzoo.com/p/famzoo-card-faqs.html#transfer-iou-prepaid

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