Deveny: Financial Tips From Fluffy

Would you pay $7 for a bagel? I sure wouldn't, but my 7-year-old daughter regularly does. Or at least she's willing to shell out seven KinzCash bucks on a snack for one of her virtual pets in Webkinz World, a site where she spends a blissfully quiet 30 minutes or so a day. I know some parents think that Webkinz—little stuffed animals that come with an online avatar that needs to be fed, exercised and dressed in cute down vests and sneakers—is an elaborate plot to mold our tots into avaricious consumers.

I suspected that, too, until I finally took a tour of Webkinz.com. I know I should have done that a few months ago, but the site had 8.7 million unique visitors in January, according to comScore Inc., and I doubt that I'm the only parent who hadn't figured out how the "Wheel of WOW" works. Kids do get some basic lessons in consumerism on Webkinz: They get $2,000 in KinzCash each time they activate a pet. Then they play games or do menial jobs (babysitting, gem hunting) to raise more cash so they can spend it on unnecessary consumer goods like a $475 "lime Corinthian dining chair" (for the "pet with a modern esthetic"). If they tire of their purchases, they can sell them back—at the original price! And the prices are crazy: An apple goes for $5 and a bottle of water costs $4. ("It is virtual money," says a Webkinz spokeswoman. "If everything was very easy to buy, kids wouldn't get much of a sense of accomplishment.")

And some of the lessons are good. Kids can't waste all their cash on junk—or their wee virtual pals will go hungry. Leslie Cohn, whose daughter Danielle, 8, has a big Webkinz collection, says the game teaches kids how to shop for bargains and spend money wisely. "It has taught me to save money," Danielle says.

That's one lesson my daughter doesn't need. My thrifty girl managed to amass $12,463 in KinzCash even as Fluffy, Kiki and their brethren were all happy, healthy and well fed. I felt a twinge of virtual pride. What a good little saver! I know she has squirreled away more than $500 in her actual savings account at Chase, which is remarkable considering she gets only $3 per week in allowance. But she's always loved her Benjamins—perhaps too much. She ran a scam in preschool that involved coaxing her classmates to bring in bills—in exchange for a few coins.

Children learn about money mainly from their parents. That's bad news for my daughter; I don't always set the best example. I am wearing a pair of shoes worth at least 40 Webkinz. She opened her bank account after she caught me borrowing $20 from her stash. I had hoped she would save one of her allowance dollars, spend one and drop one in the church basket, but she hoards it all.

One problem is that she's not responsible for any of her own purchases, according to Eileen and Jon Gallo, a psychotherapist and a lawyer who write about kids and money. They suggest having her buy any future Webkinz with her own cash. "Because her allowance isn't keyed to anything, she isn't faced with making real decisions," says Jon. As for charity, they suggest helping her find a cause she really cares about.

David Owen, author of "The First National Bank of Dad," a terrific book about kids and money, gave me more hope. Owen advocates giving kids an allowance as soon as you're confident they won't swallow pennies. You provide them childhood entitlements: all necessities, of course, plus a bike and one trip to Disneyland. If they want to upgrade they have to spend their own money. "Everything we do teaches them a lesson one way or another," he says, in an attempt to make me feel better about my past mistakes. "So it's also important to do things they're appalled by." That's financial advice I can live by.