Teaching financial literacy at a young age has a big effect later on — especially considering that according to the Federal Reserve, total U.S. outstanding consumer debt was $3.62 trillion as of May 2016. Learning accountability, the need to stay within a budget, and concepts like credit and debt, long before kids became responsible for any substantial amount of money, is necessary to decrease that number. But without incentive, these concepts can seem boring.
Tennessee startup Homey helps children get excited about money by offering rewards for completed chores. Founders Sanja Zepan and Saso Pompe, originally from Slovenia, were inspired by traditional family values of hard work and financial responsibility. The app lets parents set up chores for their kids, rewards completed chores, and get the gratification of working toward a short or long-term goal (think an Xbox or a brand new bike).
Kids can check in, see progress, and learn to understand how money is earned and spent.
“With Homey kids learn the value of work, the basics of financial planning and goal-setting, how to budget their funds, how to distinguish between wants and needs, how to save money and all about smart spending,” says Zepan.
The Homey team shares more about how they validated their idea from moms on Instagram, how feedback helped them build their app from the ground up, and why they decided to move from Slovenia to the southeast to meet their customer base.
What’s your current funding status?
Bootstrapped at the beginning, then we went through StartCo accelerator and raised a small seed round. We’ll be raising another at the end of 2017/start of 2018.
What’s your pitch?
Homey is a mobile app that enables parents to transfer allowance to their kids’ bank accounts based on the chores kids do. It that teaches kids financial responsibility and the value of work through chores, promotes saving, builds relationship with a bank, and makes paying out allowance seamless.
How’d you get the idea for it?
This app started as a chore management app that worked with photos (take a photo of dirty dishes, when someone does the dishes they take a photo of the clean sink and you see it) for roommates. We showed the prototype on Instagram, used #diychorechart, and moms from the U.S. started telling us they really want this app.
We had 500 families signed up for the beta before we had anything, so we interviewed them and then launched the app in January 2016 with them in mind. Based on feedback, we launched a reward section of the app in May and put in the Amazon affiliate integration to monetize rewards. Since more than half of kids have savings/checking accounts and those parents that didn’t open them for their kids think that they should, we decided to integrate those. We then integrated a banking solution to facilitate transactions. We launched this publicly in the beginning of May, along with subscription for new users.
How secure is Homey app?
It’s very secure — all of the family data is private, hidden behind two passwords, a shared family password and a personal password, and users also have to know their unique household name. Additionally, bank information is never stored on our own server. All the transactions are done through a secure banking partnership that works with all banks and credit unions in the U.S.
Why is it important to teach children about financial literacy?
Too many kids get into debt as soon as they set out to college. They often aren’t equipped with proper knowledge of how debt, interest, and credit works. They are excited to get their first credit cards, and without proper financial education to resist instant gratification of buying things they can’t afford, it’s a recipe for disaster. In 40 years of research at Stanford showed that people who learn to delay gratification are much more likely to succeed in life.
And that’s what Homey does — it helps kids set short, medium, and long term financial goals, shows them their progress while they are working toward their goals, and motivates them to achieve them. Based on child’s activity, Homey also provides lessons in budgeting, banking, saving, and smart spending.
What are the main features of the app, from the parent and child’s side?
Homey shows kids how money is earned by enabling parents to set up chores with points and coins values. By doing chores kids get coins that they can exchange for rewards, which they set with the help of their parents. Parents can also base recurring spending allowance on amount of points, this means kids don’t get paid until they do their responsibilities.
Homey enables parents to manage everything on their own device, or kids can login on their own device and see a limited version of the app that enables them to check chores, manage their goals, and see their progress. Parents can also adjust permissions to give kids more freedom in planning their days or even allow them to add chores, or they can lock the app even more for smaller kids and only show them their chores for the current day to reduce the noise.
What’s been the feedback from parents so far? What are the most popular chores that you’ve seen in the app?
They love it! Just today we got a review from one happy father who said that his kids are finally doing chores without him needing to nag them all the time, and that they are now even asking him for more chores!
However, it is really important for our app to keep both sides engaged, as kids quickly lose interest if parents don’t check the progress and pay out due allowances. For smaller kids chores like “brush your teeth” and “empty your lunchbox” are really popular, for a bit older kids who don’t need reminders for those basic responsibilities, jobs for extra money are popular — especially during the summer! There’s a lot of yard work, taking care of pets and vacuuming.
What’s your revenue model?
Basic Homey functionality of chore and allowance management is offered for free for families with up to three Homey accounts. For banking and additional features we offer monthly subscriptions of $3.99 for family of up to 5 and $6.99 for unlimited family members.
Who are your competitors and how do you stand out?
Our competitors are prepaid cards for kids, but we don’t believe those are a good financial decision, as they come with fees, and also don’t offer any interest on kids’ savings. We connect to the child’s existing bank account and promote a bank relationship, which is important later in child’s life. This also gives us an opportunity to partner with banks or credit unions, who are already sponsoring programs to encourage financial literacy among kids, and we can offer them much more.
How does the Southeast weave into your story?
When we launched Homey, we started getting hundreds of families from Southern states signing up — and we haven’t done any advertising in this region! We are originally from Slovenia, and European parenting is a bit different, and we also have less kids per family, so chore management is easier for us. Because of this, we knew we needed to come here to meet these families and learn as much as we can about parenting in the U.S. and even more about Southern parenting. I think this region really believes in the traditional family values of hard work and financial responsibility, parents here don’t want to dole out allowance for free, and this is why our app plugs perfectly in the chore and allowance system they are already using.
