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In a Nutshell: Managing money isn’t something that comes naturally to most kids. But parents searching for a hands-on tool to impart financial education to their children have an ally in FamZoo. The company’s prepaid card allows children to transact and learn about personal finance while their parents supervise through FamZoo’s interactive app.
People take on new responsibilities as one year slips into the next and we pass through life’s different seasons. Some stages of life come with more duties than others, but nothing can completely prepare you for the responsibility of being a parent. Becoming a parent means you aren’t just responsible for yourself anymore — you have a little one depending on you for food, shelter, and tending to their overall wellness.
Parental responsibilities shift with time, which, if you haven’t heard, seems to fly by even quicker when you’re raising a family. Changing diapers and teaching your child to walk is soon replaced by doling out allowances and shuttling kids to all sorts of athletic events and social occasions. Soon enough, your little ones are grown and on the verge of adulthood themselves, leaving you to wonder if you’ve taught them all the things that can help them thrive in a dog-eat-dog world.
Teaching your children about finances can be challenging, especially if you’re not savvy in handling your own finances. Parents who aren’t confident in their financial practices may avoid teaching their children much about money at all.
FamZoo helps parents manage the burden of financially educating their children and guides kids toward a lifetime of smart financial moves. The company offers prepaid cards so families can learn through hands-on experiences. We spoke with Bill Dwight, FamZoo’s Founder and CEO, to learn more about how the company helps parents and children build toward a brighter financial future.
Dwight and his wife raised five children who are now adults. When his children were growing up, Dwight and his wife were looking for a way to teach them about the basics of personal finance. Dwight told us the couple didn’t think lectures about financial concerns would go over too well with their brood, so they sought a hands-on method to teach their kids about money.
Dwight had been working in the software arena, and he used those skills to develop a solution that would improve his family’s financial knowledge.
“I built a little custom site for them where they could come in and see how much money they’d earned through doing chores and collecting allowances,” Dwight told us.
Dwight paid his children interest on their balances, which motivated them to try to save more money so they could earn extra interest.
“In my experience, it’s incredibly effective to have a child experience compound interest,” Dwight told us. “It has a lasting effect on them even if they can’t find a rate anywhere else that’s as good as the one the bank of mom and dad offers. Once I realized that the kids were learning some really good lessons from this experience, I decided to turn it into a business.”
Empowering Kids to Learn From Their Mistakes
FamZoo launched in 2006. Soon thereafter, the company won an award at Finovate, a conference featuring innovative financial solutions. At the conference, Dwight was approached by the CEO of a prepaid card business who suggested the companies collaborate to create a prepaid card offered by FamZoo.
Dwight told us the idea of incorporating a prepaid card into FamZoo’s offerings thrilled him because he’d been looking for a way for children to make transactions, which gives them a sense of agency. FamZoo’s cards function differently from many traditional debit cards, which can charge customers exorbitant fees when they overdraw their account. FamZoo declines purchase attempts when a card doesn’t have enough funds to complete a transaction.
“Before we began to offer the cards, it felt a little like FamZoo was kind of just something your parents did to you,” Dwight told us. “But once kids got the card, they became engaged and excited about having their own card with their name on it.”
Cardholders have to be at least 13 years old to have their own FamZoo card, but the company allows children under the age of 13 to use its cards if the parent is the cardholder. For children under 13, Famzoo allows them to include their name on the card’s custom label line.
Once a child becomes a teenager, they can remove their parents name from the card and replace it with their own. Nearly half of FamZoo’s cards are used by kids under the age of 13. Dwight told us that the most common time for a minor to start using FamZoo’s services is when they reach middle school and start gaining more independence.
FamZoo is a pioneer in its field. Dwight told us that the company invented the notion of an educational prepaid card and looks at all of its features through an educational lens.
“One thing we do that I don’t think anybody else is doing is we show every single failed transaction attempt a customer makes,” Dwight told us. “So when a kid tries to use a card but can’t remember their PIN, they’ll see that the transaction has been declined in their online transaction history. They can then click on a big red lozenge next to that transaction to learn why the transaction declined.”
You don’t have to live too long before you realize that everybody makes mistakes in life. Dwight told us that every failed card transaction is an opportunity for the cardholder to acquire more financial knowledge. Parents can partner with their kids to investigate why a transaction failed and help them understand what they can do to successfully complete a transaction when they next use their FamZoo card.
Customer Reviews Highlight FamZoo’s Successes
Having access to money for the first time can feel like a big deal to a kid. I can recall counting down the days until I received my allowance, so I could head to the mall for an afternoon of adventure. But having access to money also can lead to problems for those who aren’t accustomed to it.
FamZoo allows parents to enable activity alerts that notify them via text message every time their child uses their prepaid card. The alerts communicate where a cardholder used the card and the account’s balance. Dwight told us alerts can help parents teach their children about responsible card use.
“Some parents think that alerts like this are invasive, but they give you an opportunity to have instructive discussions with your child,” Dwight told us. “That gets into another major differentiator we provide — we’re willing to get on the phone with parents and have some delicate conversations when their child attempts to purchase something inappropriate. And we can provide some suggestions to help them keep things in line.”
FamZoo empowers children to make reimbursement requests for purchases they’ve made. Cardholders who use this feature can send a text message to their parent, who can then choose to reimburse their child for part or all of the transaction. Dwight told us that FamZoo’s reimbursement tool is emblematic of the types of features that the company’s competitors don’t provide.
Parents who are on the fence about using FamZoo with their family can navigate to the company’s website for customer reviews. Parents have the opportunity to leave comments about what they and their children have learned when their kids move on from using FamZoo’s card.
“A good step for a parent to take to learn more about us is to search through customer reviews,” Dwight told us. “Since our platform is so flexible, parents have very specific ideas about what they were able to teach their kids or challenges they were able to overcome.”
A Community of Parents Lend a Helping Hand
The saying “it takes a village to raise a child” means that the entire community in which a child grows up plays a part in forming that child into the adult they’ll one day become.
FamZoo hosts a private Facebook group for subscribing members. In the group, FamZoo’s community of parents share ideas and troubleshoot issues to help each other bypass roadblocks they encounter while raising financially resourceful children. Dwight told us the group’s discussions can lead to new use cases for FamZoo’s tools.
“When someone describes something about a challenge they’re facing in their situation, we can almost always set up a fix for them just because our toolbox is so broad,” Dwight told us. “The key thing is that parents and families feel good about the system they’re using to give their kids experience with finances. And sometimes that involves letting them learn in the real world and face some of the consequences of their actions.”
Parents can monitor their children’s purchases, money transfers, and savings goals through FamZoo’s app, which provides different interfaces to a parent and their child. The parental interface allows parents to approve or decline different requests their children make through the app.
FamZoo’s inclusive practices help underbanked families use its services.
“We cater to all families, so you don’t have to have a bank account to work with FamZoo,” Dwight told us. “Though we offer other methods, you can take your card to a CVS, Rite Aid, or Walmart and reload it there. We want every family to have an opportunity to learn with us.”