Giving children an allowance always seems like a good idea at first. But just try following through in practice. You need to remember to get exact change each week, which may not be easy if you bank online and need a pile of singles. You have to remember to hand over the money to the child on the designated day. You need someplace to put the money — but alas, most piggy banks are terrible, with tiny compartments you can't see to get any sense of how the money is piling up.
Using a few separate jars is a fine idea, but if children can get into them, they might reallocate money from the Saving jar to the Spending jar. Or take money to school without telling you and try to buy their way to the front of the lunch line. Or let their friends take some money home from a playdate. All of this hassle has given rise over the years to websites that track chores, allowance, savings and spending. FamZoo, ThreeJars, Count My Beanz, and My Job Chart are a few of the sites that aim to help children and their parents.
One of the newest to enter the fray is Tykoon, whose two founders are themselves fathers with executive-level experience at companies like LendingTree and Bank of America. And while it is early days for the service, they seem to have their priorities in order in understanding that their efforts will succeed only if the product inspires the right kind of questions with the right kind of frequency.
"This is not a pill, or three weeks at a gym or a 10-DVD set," said Mark Bruinooge, the co-founder and a veteran of Bank of America's digital operations. "It's a multiyear conversation about how your family uses money. We want it to be part of the family routine."
The idea for Tykoon came from the other co-founder, Doug Lebda, the founder of LendingTree. While he ran into the usual chores and allowance hassles as a father, the big frustration for him was watching his el-
dest daughter spend real amounts of time in virtual online worlds using real money to buy fake things. With Tykoon, he wanted everything to be real.
While the site, which is aimed primarily at 7- to 10-year-olds, is not a bank and does not tap into parents' checking accounts, it's supposed to mimic a bank in some respects. Parents can set an allowance level and automatically "deposit" virtual dollars into three categories, Save, Give and Spend.
You can connect earning an allowance to the completion of various chores or tasks. Or, if you're like me and you don't want to connect chores with an allowance because you believe that children ought to do chores without any expectation of getting paid, you can track tasks and allowance separately.
None of the above is particularly unique. Things get more interesting, however, when children want to cash out. They can make a request to their parents to use money from their "Spend" account in Tykoon's Amazon.com store or take money from their "Give" account for a charity. At that point, parents pay with their own credit cards and Tykoon subtracts the virtual money from the proper categories.
Tykoon handpicks products and nonprofit groups for children to choose from, which is annoying if your children want something that Tykoon hasn't preapproved or are fond of a cause that the site does not list. The upside, however, is that children don't end up in the sex toy aisle at Amazon. In fact, children can't do a single thing — move money, mark a chore as complete or buy anything — without a parent approving or confirming it.
Still, why such a strong focus on actual transactions? To Bruinooge, children under 18 are perhaps the largest unbanked population in the United States. But his target market is one that will not make deposits until they have their first regular jobs. "Tykoon is the bank of mom and dad until you transact," he said. "So we wanted to allow kids to have everyday experiences that they can learn from."
Striving to make enough to buy or give (or earn extra privileges, like more te-levision or Internet time, which is another option) turns out to be a compelling enough proposition that some parents find themselves getting requests from their children via Tykoon for more chores to complete.
That ought to warm any parent's heart, at least at first glance. But here's the uncomfortable thing about it: Those requests may well come via an email generated by Tykoon on a computer or tablet or smartphone that your child was using, not via an actual conversation.
To me, the biggest mark against sites like this is that they make money less visceral. Children ought to learn to handle it and count it and watch it grow slowly over time in piles inside a see-through storage container. They need to resist (or give in to) the temptation to take it out and blow it all or lose it by accident. At least, they ought to do all of this for a couple of years after starting to receive an allowance.
And as much as I love automating my own financial life, one reason sites like Tykoon haven't quite set the world on fire yet may be that plenty of parents want to keep their children away from screens if the real-world alternative, like a jar, is a reasonable one.
"I'm not trying to win a battle for screen time," Bruinooge said. "I'm trying to create a utility. The most time one would spend on the site is to see what's in the Tykoon store."
That's a fair point, though the toolishness of Version 1 of the site is what gives a few other experts pause. Sara Fenske Bahat, a former banker and regulator who is working on a technology startup related to families and money, worried that Tykoon felt more like a task management site than a money site.
"I realise you have to start somewhere and that it makes sense to begin with the parents," she said. "But to me, it's like TurboTax. It's very spreadsheet-y." A new version of the site should fix some of this.
Neale Godfrey, the author of the classic children-and-money book "Money Doesn't Grow on Trees," wondered why Tykoon didn't take more of a game-like approach. "A typical kid is out there playing Angry Birds," she said. "So how do you get the eyeball of that child as a parent and say to them that 'This is what I want you to do'?"
Godfrey has her own answer to the question, an app coming out next month called Green$treets: Unleash the Loot, that is intended to both entertain children and teach them about money while connecting parents and other grown-ups to the endeavor. It's aimed at 5- to 8-year-olds. "I went with the little ones, because the older ones are an impossible group," she said.
Bruinooge said that Tykoon was already planning on bringing in some game-design talent to help make the experience more engaging. To pay for it, he's exploring business models beyond the small payment Tykoon gets as an Amazon affiliate.
One likely possibility is to partner with major banks that would pay to offer their own versions of Tykoon, something that FamZoo is already doing with credit unions. Tykoon's founders and their investors have tentacles into many of the biggest for-profit banking institutions, and partnering with any one of them, if it happens, could put the site squarely in front of untold numbers of parents.
In a perfect world for those customers, graduates of Tykoon with, say, five years of good behaviour under their belts would one day be eligible for no-fee checking accounts or a rock-bottom rates for private student loans.
But in reality, teenagers and college students are among the most error-prone of all banking customers. The best test of all for sites like Tykoon will be whether their heavy users learn to be so patient, persistent and thrifty that they make no money mistakes at all as young adults.