Alumni create web service to teach kids personal finance

Raising five children has taught Bill Dwight ’84 that lecturing kids about money is futile. So the computer science concentrator from Palo Alto, Calif. decided to devise a more interactive approach. He is now the CEO of FamZoo, a money management and education website that he launched as a subscription-based service last month after having worked on it since 2005.

FamZoo offers personalized methods for teaching money management to children from 4-year-olds to teenagers. The website allows parents to schedule chores, set up allowance plans and create virtual accounts for their children to track their savings and expenses. None of these approaches is new, of course, but putting them together in an easy-to-use web portal is.

Dwight said that FamZoo's features will "help busy parents teach children critical skills that they're not learning in the classroom," such as being realistic about costs and learning to live within one's means.

After years of fine-tuning the website through feedback from test families, FamZoo opened to the general public last month with a monthly subscription charge of $5.99 per family.

Dwight explained that he came up with the idea for the website 10 years ago, out of frustration with the increased commercialism on display in his Silicon Valley neighborhood.

"During the Internet boom, there was a tremendous focus on selfish consumption habits, and we were looking for ways to battle that and imbue some strong habits in our kids," Dwight said.

In founding the website Dwight, said he fulfilled a long-held wish of building a company with his college roommate, Chris Beaufort '84. Beaufort, who was also a computer science concentrator, is now Famzoo's Vice President of Operations.

"We had always wanted to do something on our own," Dwight said, "but we never really found just the right idea ... And finally with FamZoo we found something that we were both passionate about."

Beaufort said that leaving his job at Hewlett-Packard to join the upstart was an easy decision.

"My internal job clock told me that it was time to do something entrepreneurial again," Beaufort noted, "and the way the economy was going, it was probably better to join a smaller company."

FamZoo is a modern version of the strategies families once used to teach their children about saving money, Beaufort explained.

"A family might have three jars: a savings jar, a spending jar and maybe a charitable giving jar," he said. "FamZoo is taking that age-old concept of managing these different jars and putting a technical spin on it, which we think appeals to kids nowadays who are exposed [since] grade-school ... to computers."

Get the best of the ‘Prince’ delivered straight to your inbox. Subscribe now »

And, unlike the jar method from a simpler time, the website holds parents accountable as well.

"One of the things the kids like is that they don't have to nag for their allowance," he said. "The site solidifies any agreements, and the parents need to be consistent, so ... it goes both ways."

"It's really a virtual version of a real bank," Dwight explained. He added that, as children get older, they can take advantage of more sophisticated site features, such as handling mock loans and savings accounts and setting aside money for charitable giving.

Dwight noted that the principles taught by FamZoo may have political implications as well.

If children learned about money management early on, he said, legislation such as the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act would be unnecessary. Part of the CARD Act imposes restrictions on credit card marketing geared at youth under the age of 21.

"Part of me says, ‘That's fantastic. Why should these companies be preying on these kids?' " Dwight said. "But then the other half of me says, ‘Why are these kids so unprepared to deal with that reality?' "

Beaufort also expressed hope that better financial education earlier in life will pay dividends when young adults get their first credit card.

"You hope that after four or five years of [using FamZoo], these lessons will be solidified in their brains," he said. "And when they go out there and get their first credit card, for instance, they won't go hog-wild and get themselves into the trouble that a lot of folks get into when it comes to personal debt."

Dwight said that feedback from both parents and children has been positive.

"Kids love the concept of independence from their parents, and parents find that kids actually end up spending less money" because it is their own money they are spending, he said.

"When they see the candy on the checkout line, it doesn't become an argument anymore because the parent asks if they have the money in their account for that pack of gum, and the kid can decide if it's worth it — it's their choice," Dwight explained.

At the same time that he strives to help families budget money, Beaufort said working for FamZoo has helped him budget his time.

"I can actually go to my son's basketball game at 3 p.m., or see my daughter's soccer team at 4:30," he said. "And then I can always come back, have dinner at home, and work for two hours later, so that aspect has been wonderful."