040: Teaching Your Kids About Money with FamZoo’s Bill Dwight

Bill Dwight is a dad to five, husband, lifelong software geek, and founder of FamZoo which combines prepaid cards and a financial education for kids in one award-winning family finance app.

So let’s dig in. Let’s meet today’s Master of Money.

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One of Bill Dwight’s core beliefs is having a deep skill that you can always rely on. Bill is a husband, father, and self-proclaimed lifelong software geek. He is the founder of FamZoo which combines prepaid cards and a financial education app for kids.

Approaching Finances Like a Software Engineer

Bill actually asked his wife what she thought he could attribute his financial success to and she told him it was because he took the time to actually understand his finances. He approaches it like the software engineer that he is. As he thinks back, a lot of the positive financial moves he made just had to do with not caring what other people thought of him socially.

Bill compares finances to coders: they become better at coding by doing a ton of it. The more you know about finances, the better you will be.

Using An Advisor to Help You Review and Understand Finances

There have been lots of changes in finance since Bill was young. Online banking, 401k’s, and automated bill pay are just a few of the things that didn’t exist at the time. He didn’t have blogs and podcasts about personal finances.

It’s important to keep up with finance as it changes. You don’t have to be an expert at everything. Using an advisor is something that Bill’s family does and that he recommends. This doesn’t mean that Bill delegates everything to the advisor but the more he learns about strategies and discusses them, the more value he gets from his advisor. Taking the time to understand finances will enable you to really trust your advisor. It’s not just about taking instructions, it’s about debating strategies and figuring out what works best.

From Scorecard to Tool

Bill considers himself lucky because he fell into a career very early on. Computer science was a great path because he loved it and because it was a very sought-after profession. He hasn’t had any real money struggles over the years since his first job right out of college paid him more than his expenses.

Growing up in the Silicon Valley with a successful entrepreneur for a father gave him ambivalent feelings about money because he wanted to prove that he could make it on his own without the help from his father’s successes. He admits to having been given a tremendous leg-up, but for most of his career, he didn’t have a purpose for money. It was just there. It was only in his early 40’s that he realized that if he didn’t start something from scratch for himself, he would never do it.

His money took on a purpose when he decided to make something more of the online banking mock-up he had created for his kids. His money went from being a scorecard to being a tool. One of the key paths to being wealthy is building something valuable, or helping someone else build something valuable. You don’t have to be the sole risk-taker but being a team player can be incredibly beneficial.

Bill and his wife got married in 1984. They were naturally good at saving money because they were so busy focusing on other things. His wife was busy getting her ph.D. and shared the same values as Bill as far as saving and frugality. They only spend money on things they care about.

Having A Deep Reliable Skill

The reason that Bill was able to be so aggressive in his career is that he knew how to write software. He put the time in to really understand it so that he was in a position to tell the unvarnished truth or just find a job elsewhere. Building a deep skill is intensely valuable. It doesn’t have to be computer software to be lucrative. His daughter is a skilled equestrian and got out of a fair amount of debt by giving lessons on the side. Your skill is your weapon.

Working with Family to Avoid Debt

Bill has never had a negative net worth. He buys everything with cash and was able to buy cars and his homes with cash. His dad gave him a loan which has worked out well for them. While some people would advise against doing finances with family, it has worked for Bill as long as it’s been formalized and treated like a real loan.

The Bucket of Funds

Bill started FamZoo ten years ago. He set aside separate funds that he funneled into the corporation. He didn’t put all the money in right at the beginning because he wanted to run experiments first. He was willing to take risks but wanted to be smart about it. To date, he has put about 1.6 million dollars into FamZoo but initially, it was seeded with a few hundred thousand.

He had that separate bucket of funds and he always had two years of runway in the bucket and every so often he puts another 100k into the business.

What FamZoo Is

FamZoo is an online banking service that’s like training wheels of personal finance for kids. They issue prepaid cards to the family members, (a spending card, savings card, and giving card) and the parents have a “parent funding” card. They take all the personal finance terms that people need to know as adults and they’re speeding them up so that kids can understand them and get hands-on experience.

Bill’s kids were in middle school when he started FamZoo. He was looking for a product to use to teach them more about personal finance and just wasn’t finding what he was looking for. He wanted something that was hands-on for the kids, where the parent was in control and where any mistakes wouldn’t have enormity to them. He wanted mistakes to be okay.

Related: Teaching Kids About Money [The Complete Guide]

Creating 401k’s for The Kids

The big change for Bill was diversification. As he’s repeated, he’s had good fortune in his career. One thing he did do was create a family 401k. He set them up for his kids as they got their first job. He loved that approach because it started conversations about things like investing very early on. All his kids have a net worth spreadsheet and they get together every six months to look at them.

Learning More About Personal Finance

Bill says he is constantly learning more about personal finances. Some of it just has to do with how circumstances change. He enjoys the learning experience, especially since he was really ignorant until his 40’s because he didn’t take an active interest.

Working with his kids has taught him more about personal finance. You can’t be telling your kids to spend, save, and give if you’re not doing it yourself. He’s gotten way more systematic himself to avoid telling his kids one thing while doing another. He automates his giving now and keeps a donor-advised fund.

Goals for the Future

Bill can only achieve his dream of reaching every kid in the United States by making FamZoo a viable business. He’s a big fan of the marketplace, so ultimately he decided that he would better execute in a competitive setting. His key focus is on getting the word out and making the company profitable.

Bill’s least sensible cash purchase on paper is probably his family’s vacation home. For them, it’s a refuge where they can escape. It doesn’t make perfect sense on paper. He has no interest in being a landlord so besides owning the vacation home, he doesn’t have much interest in real estate.

Looking Back to the Beginning

Bill feels enormously blessed. From being born into an entrepreneurial family, to trading in his tennis racket for a keyboard, to getting married and joining Oracle, and now on to creating FamZoo, he has felt very fortunate. His hope for FamZoo is to have an engine that can really give back. He just wants to keep building on all the wins he has had so far.

Show Notes

• 01:30 – How being a nerd helped Bill with financial success
• 06:20 – Understanding finances by debating strategies with an advisor
• 10:55 – How his dad’s success made him conflicted about money
• 22:40 – Using your skill as a weapon
• 24:45 – Avoiding debt by using cash and working with family
• 27:10 – Running a corporation out of a bucket
• 29:10 – How wanting personal finance mistakes to be okay led to creating FamZoo
• 30:45 – Creating conversations about investing with his kids
• 35:30 – Learning about personal finance by setting an example
• 38:43 – Reaching every kid in America with FamZoo
• 45:50 – Creating an engine to give back

Links/Terms/Concepts from the Show

• FamZoo.com – Prepaid cards and a financial education for kids – all in one award-winning app. Read our review.
• Family Finance Favs – Tips to help you give your kids the financial education they’ll need to thrive in the real world.
• “Family 401(k)” – Pave the Road to Retirement For Your Working Teen With A Family 401(k).
• Net Worth Spreadsheet – Maintain A Net Worth Spreadsheet With Your Teen

What’s Next?

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This show is part of the FinCon Podcast Network and was produced by Steve Stewart.