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A virtual bank for the kids’ allowance

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The bank of mom and dad can be an unreliable place. Forget FDIC insurance; if you’re a kid, getting your money out can be a challenge. Just hear the plight of 8-year-old Michael Skyvara’s friend Simon.

“Simon, he’s saying his mom always forgets so like every five weeks he gets like $2,” Michael Skyvara says.

Michael doesn’t have that problem. His parents are on top of things. His mom Suzanne’s laptop has a site showing her kids’ spending and savings in intricate detail. There are even pie charts. Michael and his brother get a weekly allowance of $7 each.

The money gets virtually deposited into virtual accounts on the site, and the kids get to decide how much to spend, save and donate. 

Then, when they want something, Suzanne Skyvara is prepared.

“We might be in the toy store, and the boys start saying ‘I want this, I want this,’” she says. “And, it’s like, OK, it’s up to you, you have an allowance. So, I’m able to pull out the iPhone and go, OK, you actually only have $6 in your account right now and I don’t think you’re going to be able to pay for it.”

The Skyvaras live north of San Francisco and use one of the growing number of services that track allowances online.

On the virtual banking site she uses, her kids even earn interest: 5 percent a month.

Quite a rate, if you can get it. 

Since these accounts are virtual, parents still have to keep the money on hand. Analysts say these sites are unlikely to take off until they’re tied to parents’ real accounts.

The American Institute of CPAs says the average kids’ allowance is $65 a month. That’s $780 a year. Only 1 percent of kids save any of their allowance.

Beth Kobliner, who wrote “Get a Financial Life,” is skeptical these sites can teach good financial habits. She says these sites could ultimately lead kids to spend more.

“Every day, going online checking, gee, how much money do I have now, and oh! here are all the great things I can buy,” Kobliner says.

Most of these sites either charge the parents money or have tie-ins with stores like Amazon.

And, Kobliner worries that by reducing an allowance to numbers on a screen, kids won’t experience the pain of spending cold, hard cash, but at least their parents won’t forget to pay up.

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