One of the most important tasks of parenting is teaching your kids how to handle money well. (Because Lord knows school won’t do it). Unfortunately, the stigma of talking about money, bad political views on finance & capitalism, or just ignorance leads to a lot of false teachings and bad habits about managing personal finance.
With the wrong attitude or bad habits, people end up too cavalier with their cash; blowing it on status symbols, fast women & slow horses.
The Bank of Dad
But not my kids. Introducing the “Bank of Dad” - an exercise in teaching personal finance, savings and investments to the kids. After an influx of generous gifts to the kids from family & friends for various milestones, (we’re gonna get right on those Thank You notes) I realized the kids need a boots on the ground lesson on the virtues and possible pitfalls of personal finance, savings, spending and DEBT .
We have the big stuff covered. 529s, savings accounts, their room, board and groceries—and they will learn that too. I’m talking about wanting to spend $20 at TARGET for a Barbie doll immediately after opening the Hallmark card it came in.
We’ll start simple. Depositing money in the Bank of Dad and earning a little interest. Build up that savings and investing muscle.
As they grow, we’ll add new wrinkles. Overdraft fees, loans, maybe even Certificates of Deposit(CDs). Anything to make sure they avoid the carnage of Klarna and Buy Now Pay Later Lenders.
Banking Mechanics
The mechanics will be simple enough. The Old fashioned banker's hours spread.
The Deposit Rate
I will offer the kids an interest rate to keep some money with me and save it for a rainy day. Each allowance day, I’ll ask if they want to keep some and I’ll give them their interest payment on the balance.
The Lending Rate
I’ll also be willing to give them a little extra cash….for a price. And here is where the fun begins. If they have a loan out, then I’ll TAKE a bit of the allowance back plus a higher interest rate.
Other Ideas -
I’m going chain a pen to my desk to write the deposit slips out by hand.
Pricing out a velvet waiting line ropes for them to walk through
Keys To Success-
Be Tactile — I’ll drop those interest-earned coins into their jars like a slot machine in Reno paying out a Jackpot
Be consistent — It will take time for them to pick up the lessons and value
Be instantaneous — Kids don’t learn when there is delayed satisfaction
Be Firm — f*ck you : pay me.
Final Thoughts
Will I take a profit from my own kids? —- Yes.
Will I enjoy handing them the $12 bucks they earned from cleaning their room then immediately taking $3 back to pay the loan for that American Girl doll? —- Also Yes.
Will it backfire and cause a tantrum the first time they hit a zero balance or go bankrupt? —- Probably Yes.
But will they start thinking about money more seriously, more wisely, and in a more sophisticated way…I hope so.
P.S.
I’ve been told I need to start referencing the movies and GIFs so I’m starting a footnote section.
Interested in being on the Trader Dads Podcast in 2025? Shoot me an email! I’d love to have subscribers on to sit for a discussion
TRADERDADS MAILBAG
Thoughts? Questions? Comments?
Reach out! Maybe I’ll do a full post on the topic or as a Q&A
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