I’ll admit that I’ve had issues with my kids and money. As soon as they get it, they want to spend it. I try and teach them the popular Give/Save/Spend model and it ends up just being a pain to keep up with. Our second child was using three of the four corners of one of his dresser drawers to segregate his money into categories. We then graduated to Ziploc bags.
Our oldest has a little bank with three compartments for the giving, saving, and spending. But he lost the key, and when I gave him my copy, he promptly lost that.
The biggest pain of all is when they earn a dollar, you have to start divvying everything up appropriately. One dollar earned means you need five dimes and two quarters (one dime for giving, and then half of the rest for savings—a quarter and two dimes, and the other half for spending—a quarter and two dimes). If they earn $1.50 for something? Yeah, forget about it. It turns into, “I’ll get the change later.” Or, “Let’s work on that later.” That’s Parent Code Speak for, “I’m banking on you forgetting. (And I’m being a lazy dad.)”
It sounds harsh I guess, but it ends up being a tedious nightmare.
So FamZoo had me pretty intrigued. You set up virtual accounts for your kids, Giving/Saving/Spending and then pay them by simply making a transaction in one of the accounts. Or you can set it up where it does weekly or monthly allowances that are automatically distributed to various accounts based on percentages (in my case, I’d use 10%/45%/45% for giving, saving and spending respectively).
You can even have their savings account earn interest that you specify. Remember, you’re the bank, so you’re paying them the interest.
I set it all up last week and then sat the kids down that evening to show them how it all would work. Well, I somehow forgot to save the password I’d picked, so I needed to get a new one. FamZoo is still very early in their buildout process it looks like, because I got an email directly from the CTO 21 minutes (edited: I had originally written four hours later, but that was four hours from when I first set it up.) later and he had manually reset my password. (Awesome he was so responsive during the evening. Reminds me a lot of how things started with YNAB. And what we’re trying to maintain for our customers!)
Before that password reset though, I had my kids as a captive audience, and an anxious wife, ready to move on to other things for the evening. So I didn’t have time to wait for the password. I decided I’d use YNAB to do the same thing. Granted, it won’t have all the features of FamZoo, but it’ll do the job we need it to do.
(Some of you are probably already doing this, and you’re thinking to yourself, “Duh Jesse! How come you’ve been torturing yourself for so long?!” The answer: I don’t know.)
The first thing I did was set up a new Master Category:
Then the appropriate categories for each of our kids (not including our youngest, who’s not yet two, or the new boy/girl coming in January):
I added an “allowance pool” (more on that in a second) category:
Then finished up with the rest of the categories. I ordered them by age, then by priority (giving, saving, spending):
Finally, I took the money they had on hand (we picked our oldest son’s lock on the bank he’d been using, which he found simultaneously disturbing and cool) for each of the kids and budgeted those amounts to the correct categories:
Each of the kids got to see me count their money and enter the amount. I then made sure they understood that this was their money, and I was the bank. I then sync’d with my iPhone and showed them how I would know how much they had in Fun at any moment by just looking at my phone.
How this plays out
The Kids Earning Money
The kids earn money by doing morning/evening chores. Each week, if they’ve done their chores, they’ll be paid. We’ll pay them by budgeting the appropriate amount into their respective categories. I’ll still need to do some math, but I won’t have to deal with change.
The Kids Spending Money
When they want to spend their fun money on the umpteenth pack of gum, we’ll check the balance in their Fun category and let them see it. If there’s enough, Julie or I will buy it for them, and record the transaction in our phone. We’ll then show them that the balance has gone down.
You may think there’s a psychological loss here, that the kids aren’t “feeling” the money, seeing those crumpled Washingtons, and hearing the jingle-jangle of Lincolns… there probably is a bit of a loss there. But when I purposely pulled out $80 in ones from my oldest son’s account (birthday money we’d been holding for him at ING) for him to completely blow on a Leapster… if this were Twilight, and those dollars were vampire powers, he was Bella—impervious.
So I guess I’m okay with the small loss of psychological power (since I’m yet to find proof of that with my kids) for the ease and convenience brought about by the whole system.
The Kids Giving Money
When the balance in their ‘Tithing’ category is high enough, we’ll do the same as above. We’ll show them the balance in their Tithing category, write a check, and have them give that at church on Sunday. I’ll make sure they see the balance go down, and it’ll be a good teaching moment to talk about how the money’s used, why we give, etc.
The Kids Saving Money
This is the best part. The kids don’t see this money. Ever. It never touches their hands. They can’t lose it. They can’t spend it. When it’s large enough, I may consider moving all of their Savings accounts to one online account to earn some interest, and still just track the segregation here on the budget. That’s a bridge we’ll cross when we get there. With how little we pay them for their chores, it’s going to be a long time before they have savings of consequence.
The Allowance Pool
The extra category called the Allowance Pool is basically a holding area for funds Julie and I set aside for potential allowances. We don’t pay the kids automatically, so we don’t know how much they’re going to earn until they’ve actually earned it. I figure we’ll throw $30 into that and it will stretch quite a while (the kids can earn up to $1 per week.)
This is the system we’re running with. I’ve yet to have any of the scenarios above actually take place. Right now we’re in the honeymoon phase of this new idea and it’s all feeling very doable. I have high hopes for this for two reasons: 1) It can’t be worse than what we were attempting and 2) It’s integrated right into our normal workflow as is.
Let me know if you’re going to attempt something different, already have and what you learned, or if you have any questions!
Your Next Step
Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?