Bill Dwight is the creator of allowance and family finance management system, FamZoo. Offered as a smartphone and web-based app, this system allows parents to give (and take away) money via monitored debit cards to their children. Parents load up the family bank through an "admin" card in order to distribute funds among their children for things like allowance, IOUs or covering their part of the family cell phone plan.
Bill created the system to help families teach their kids about money early on. Each child gets their own debit card and can make real purchases with it.
Though the system is incredibly useful for families wanting to manage their kids' allowance and savings activities, it also proves useful for something else: data on kids' buying patterns and habits.
Analyzing kids' spending patterns over 90 days, Bill found that 51.8 percent of Spotify subscription charges were declined due to lack of funds, while almost 98.4 percent of Chipotle transactions were successful within the same time period.
What does this mean? Bill concludes that this speaks directly to kids' inability to have foresight when it comes to their money. He adds, "Clearly, lots of kids aren't ready to plan ahead (beyond their next burrito) and responsibly handle a recurring billing arrangement."
In other words, lack of planning, budgeting savvy, and spendthrift habits could spell trouble for a child's financial future.
In light of these findings, Bill suggests that parents allow their kids to have at least one recurring charge on their debit card. He's a big proponent of letting kids make small mistakes with money to avoid the larger mistakes with more negative impact as an adult.
Having a recurring charge, like a Spotify subscription, allows a kid to plan (i.e. budget) for the future and feel the pain and perhaps embarrassment of missing a payment.
In the long run, planning for upcoming financial obligations can only help a child. They'll be ahead of their peers when it comes to managing their finances and eventually maintaining a good credit score.