Notes from the Author
How and why Family Bank was developed


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There is a very revealing survey of 1000 families published by Visa. Here's a summary:

  • 85% Totally Agree - 'Young adults today lack the basic skills to successfully manage their finances'

  • 91% believe young people learn the most about finances from 'the school of hard knocks'

  • 2% of young adults are 'Very Prepared' to manage their personal finances responsibly

  • 99% Totally Agree - 'It's important to teach high school students good money management skills before they leave home.'
    (the entire survey can be found on the Links page)

The survey paints an interesting picture. Parents are very concerned about financial education, but don't seem to be very good at it, and they recognize that fact. These parents were asked 'If you could give other parents one piece of advice about teaching practical money skills to children, what would that advice be?' The top five responses were:

  1. Start Early

  2. Teach to Save

  3. Earn their money

  4. Don't spoil them

  5. Value of money

Having spent the last four years reading everything I could find on the subject, my list would be pretty much the same, and the recognized experts in the field of financial education for youth would also agree (except on point 3 . . . the experts caution the use of money as a 'club' to enforce behavior, but agree that compensation for extra effort is a good thing. The general consensus is that routine expectations, like picking up your room or helping with the dishes, are just part of being a member of the family and shouldn't be tied to money. But taking on extra responsibilities can, and perhaps should, be rewarded.)

There is general agreement among the experts that giving children allowances, and letting them manage their own money, is the best way to prepare them for a successful and stress-free financial future. One Canadian study, shows about 45% of parents do give their children an allowance, a Louis Harris and Associate survey shows a range of 23% to 47% dependent on age (8th and 9th graders at the high end of the range, 12th grade at the bottom).

Wait a minute! These numbers don't compute! If roughly half of us are doing what the experts advise, then why isn't it working better? The statistics indicate that our children really don't have very good financial skills. There is an alarming study by Nellie Mae (administrator of college loans) that indicate a very high (78% and rising) percentage of college students are carrying quite a load of high interest, unsecured, credit card, debt (the survey is on the Links page).

Some families are doing a marvelous job of financially educating their children, but they are in the distinct minority. The 55% of parents who don't do anything (but lecture) to try and keep our children from enrolling in 'the school of hard knocks' are not very likely to succeed. But what about the 45% who give allowances and support a structured approach? Why aren't they doing better?

My personal belief is, that in most cases, a well intentioned allowance system falls into disrepair. It works for a while, but without regular maintenance, it's like a car without an oil change, that eventually breaks down. Parents find themselves giving in and giving up. Sure, they care . . . they just lack the discipline, time, and energy to persevere. They end up giving money to kids on Saturday and then just forget about it (until the child needs more on Thursday). In too many cases, we don't continue our efforts at financial education. It just becomes a hassle and we give in . . . and become the money tree for our children. And if you're a child with a money tree . . . what's there to learn?

I wrote Family Bank as a tool to help parents teach their children the value of money. The program establishes a process for experiential learning. It combines 'auto-deposit' to give the allowance, with a structured savings plan, and tracks the child's spending habits. It contains a 'Loans' module to help teach your children the realities of indebtedness.

Family Bank does allow you to set up a list of chores. Use this feature carefully. Chores are optional and used only as one factor in determining periodic raises or to justify 'bonus' deposits. We feel strongly that allowance should never be withheld or used to modify or control behavior. I know it's a fine line, but here it is . . .

  • A child helps around the house because he's a member of the family and everyone helps out

  • A child gets an allowance because he's a member of the family and it's in everyone's best interest that he learn to manage money.

  • A child does not get an allowance BECAUSE he helps around the house.

If you want to create a real problem, then insist on using money to punish a child. Our position is simple . . . teaching kids to manage money is teaching kids to manage money . . . it is not about controlling their behavior. We strongly advise that you NEVER use money as a reward or punishment in order to modify behavior.

The program comes with a set of rules that, when agreed to by parent and child, and adhered to by the parent . . . will help your children develop the habit of sound financial management. Most importantly, it's a system that, once in place, stays in place. It guides the parent and the child. When it's time for an oil change . . . it tells you.

Family Bank is unique (and I believe important) for many reasons

1. It's simple to use (a bright six year old can use it)
2. It's never too late to start (16 year olds don't find it 'juvenile' . . . there are no dancing bears, it's a real application program).
3. It's objectives are important, and if the rules are followed, will be achieved.
4. It is the first program (of which I am aware), that actually encourages positive parent/child interaction about money.  Instead of the computer in it's typical role of isolator, it actually requires that the parent and child sit in front of the machine at the same time and talk with one another.
5. It combines cognitive ("this loan will cost you 12%") and experiential ("gee, if I wasn't paying 2.50 a week for that loan, I'd have enough money to . . .") learning.
6. It requires almost no time actually at the computer in order to achieve it's objectives.
7. It sets in place a process that could (should) last throughout the child's adolescence
8. It alleviates family stress by removing points of conflict and encouraging positive communication.

Why did I write it, and why do I feel so strongly about it?  I'm a parent.  I've done my best to be a good one, and am blessed with four happy, successful, children.  But no matter how hard you try, or how well you do, any parent worth his salt wishes he had done better.  We all must do what we can to improve things, using the tools at our disposal.  My tools, these days, are software and the PC.  I have spent years writing very complex programs for government and industry. Now, with the perspective of fifty-five years and four children, I want to write programs that make family life just a little simpler. Family Bank is the first of those programs.

If you have an allowance process in place for your children, and it's working . . . don't stop. If you don't, then read the literature that's available (check out the articles and web sites on the links page).

It's my hope that you'll choose to implement a 'Family Bank' using our software. You and your children will benefit from a structured process that is positive in it's approach and very simple to use. But please, whether you choose our program, or some other method, start the structured financial education of your children today, and continue it!

Our Mission:

ParentWare provides family friendly software to help you meet the day to day challenges of raising happy, healthy, children. Our special focus in on life skills education. Watch this site in the months to come for some very exciting products.

Our featured program is 'Family Bank'. Use this program and your children will acquire financial skills and savings habits that will last them a lifetime.

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