First of all does social saving really exist on any level?  Not really, that’s why we need The Kitty.  If there is anything such as social saving or social banking, credit (no pun) will go to SmartyPig for their ingenuity.  SmartyPig is a way to publicize what you’re saving for.  Talking about your goals has always had a manner of success in any light, this was what SmartyPig had in mind with their savings account.  Along with offering a fancy interface that attracts even cynics such as myself, they are offering a great interest rate that rivals ING Direct.  I’m not going to talk about them much more because they’ve already gotten the blogger love from the big guns at GetRichSlowly and The Simple Dollar.

The Kitty is something slightly different.  Instead of a savings account with a goal for one person, its a savings account for a group.  There is no goal, instead the account just exists simply to hold the money, like Escrow.  You also don’t publicize your account to the world, as often the world doesn’t care, or shouldn’t really know about it.  The account offers an interest rate of course, but since its mostly serving as a holding tank, its not that important.

Deposits are so easy too.  If you’ve ever bought something online that’s all you have to do.  Put in your credit card number and the amount you want to contribute, and your card company registers it just like a purchase.  Decide later you don’t want to make the contribution and the account can even be set up to take all or a portion of that contribution out.

Are there really practical uses for an account like this?  There’s plenty.  I can use my family as an example.  Since before I was born my extended family has taken vacation trips to the beach.  The money is pooled together and we get a nice house right on the water.  The rentals costs thousands (there are a lot of us) and then more cash is thrown in for food.  Inevitably, after the week is over and all expenses are added up, some money is left over.  One of my aunts holds onto it and its often referred to as the kitty.  A kitty is a pool of money, hence the reasoning for The Kitty.  Instead of keeping cash in an envelop, my aunt could open a Kitty account.  As an added bonus, when it comes time for each family member to throw down for next year, instead of mailing checks they can deposit into the Kitty account with a credit or debit card.  My aunt can track who has paid and how much, and who hasn’t paid yet.  As the administrator of the account, she’s given a special checkbook or debit card that can be used to get money out of the account.

My family has another example.  We did our own version of “The Biggest Loser” to see who could lose the most weight over a set period of time.  Everyone participating (I did not) could have deposited their $20 into a Kitty account where it will sit safely and get interest until the winner is announced.  Once the winner is announced, issue a check for the amount in the account, and close it.  This would apply to the annual office pool for the NCAA tournament.  If you’ve ever participated in a large group like I did last year, there were a few thousand dollars up for grabs with multiple winners.  Instead of having the organizer hold thousands in the top drawer of his cubicle, we could have organized the pool with the Kitty.  Again, the winner(s) would be issued checks from the account.

Now there is an element of trust here.  We have to trust our aunt not to squander our funds on something else.  Or I need to trust that the administrator of the NCAA office pool won’t go and buy his family a set of iPhones with our tournament money.  But we already do this, and its much safer sitting in a bank account than it would ever be in someone’s office.  The fear of wrath from your family members or co-workers keeps the keepers of the money from spending it.

It doesn’t stop with pooled money either.  Got a fundraiser to spread the good word that boxers aren’t an aggressive breed despite what the morons at a local apartment think?  Easily do donations online!  Graduating and don’t want cards from your family but still want gifts?  Send them to your Kitty account.  Let them see what others have contributed so they’ll feel pressured to one-up eachother.  Everyone (and by everyone I mean you) wins!

Many (and by many I mean none) of you have asked if you can buy a Weakonomics T-Shirt or a Weakonomics brand beating stick to attack your Congressional Representatives with when they come to town to campaign.  Well I don’t have those (I’ll get on it), but if I did, I’d let you buy them by transferring money into my Kitty account.  Now we’re talking about a PayPal competitor, which many small businesses use for their online retail.  Advantage: Kitty account since its FDIC insured.

I suppose I forgot to mention that.  Like SmartyPig, The Kitty is a front end for an actual brick and mortar bank, instead of being a bank by itself.  The bank makes money from the deposits the same way any other bank does.  They also get access to customers they couldn’t reach before.  SmartyPig is backed by a bank in Iowa, a bank that has no presence where I live; but they will if I open an account with them.  That is why a brick and mortar bank is very happy to back an operation like The Kitty.  There’s just one minor problem.

The Kitty doesn’t exist.  With inspiration from PayPal, SmartyPig, my own bank & employer, and maybe one too many Yuenglings (an actual American beer) I came up with the concept.  Perhaps someone thought of this before me, but I spent an extraordinary amount of time (4 minutes) doing in-depth research (Google) and could find no record of something like this existing.

What do I need to make it work?  A fancy interface like SmartyPig and ING Direct, the backing of a brick and mortar bank, and the John Hodgman/Justin Long combo from the Mac ads to talk about how cool it is versus stuffing cash in a box.  I’m aware there are banks out there reading this, lets get together and get this working.  Until then I’ve got beating sticks to paint.

Related posts:

1. Social Banking
2. Weakon 230: Social Security
3. Working with Teens: Teaching Personal Finance on a High School Level
4. Social Security, I can borrows dollars ya? K Thanks bai!
5. 5 Problems With Social Security

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