Introduction 1- Family Legal System 2- Family Economy 3- Family Traditions Back to Happy Family Into

An Inclusive “Family Economy” continued...

The beauty and benefits of the Family Economy will begin to manifest themselves right away.

Suddenly the kid you hated to take shopping or anywhere near a mall because you had to say “no” about a hundred times (every time he said “can I have that?”) is fun to take along because this kind of conversation begins to happen:

Child: Can I have that?

You: “Sure”

Child: (looking at you like he must have mis-heard) “I can have it?”

You: “Of course you can. Did you bring your checkbook?”

Child: (a look of horror) “Oh no, I forgot my checkbook!”

You: “I feel your pain son; I’ve done the same thing. I hope you remember it next time”

Then the next time you are together in some commercial establishment (and he has his checkbook):

Child: “Can I have that?”

You: “Sure, you can buy anything you want. Got your checkbook?”

Child: “Yep, hand that down to me.”

You: “OK, here it is.”

Child: “How much is it?” (a question that has never occurred to him before)

You: “Well, look there on the price tag.” (he had never noticed price tags before)

Child: “$19.95. Twenty dollars!? They want twenty dollars for this? Do they think I’m stupid? Put this back up there dad!”

And the learning goes on!

There will be the time when the nine year old pays a hundred bucks for a pair of designer label jeans and wants to take them back the next day (dirty of course) because she forgot she needed money to go to the movie with her friends.

And the time when you see your son’s shirt hung neatly in the closet for the first time in memory and ask him if he’s feeling alright and he says “Mom, I paid thirty five dollars for that shirt, I’m not leaving it on the floor.”

And even the time when your daughter sees the Tsunami victims on TV and comes in with her checkbook and says “Can I send some of my money over there to help those people?”

The fact is that, once kids perceive ownership, many things become possible that just were not feasible before. Things like giving. Things like real gratitude. Things like budgeting. Things like taking care of things and taking pride in things. Things like saving.

As the pegs and the bank and the checkbook and the responsibility for buying things become established (don’t expect a perfect system right away--let it build, and let the learning come at its natural pace) you can introduce the element of interest in the family bank. Let the child have a second, interest-bearing account in the bank that is separate from his checking account. Have a passbook in the bank that keeps track. Negotiate the interest, but let it be high, and often, and so their money will grow fast, but put in the stipulation that the money in that account is for college, and agree on the percentage of college tuition that they will pay.

With many families who have instituted the family economy, the practice has been to take 15 year olds down to a real bank (or better yet a brokerage) and transfer all of their money from the family bank account to the real account. Kids who have been writing out checks for seven or eight years are ready for that.

In families we have worked with, some of the family banks, if you can believe this, pay interest as high as 10% per quarter! (Remember, before you try to find them so you can invest your own money, that they are not federally insured!) The parents want that money to multiply, so that their kids can feel real ownership over the money that will help to pay for their college tuition. We have heard many touching stories of eighteen year olds walking up to the bursars’ or registrars’ office and, with a shaking hand, writing out their own check for four figures, and looking up at an accompanying parent and saying “Whew, that’s a lot of money.”

To which the parent replies “Hey, wait until you see my check for the other 80 percent.”

To which the freshman says “Yeah, I think I better study hard!”

Ownership of his own education! Think of the benefits of that!

And ownership later on of his first house! Many family banks, started out as kind of a game in a family economy for little kids, have become real family banks, LLC’s that contain funds that kids can borrow from, interest free, for the down payment on their first house, or as matching funds for graduate school, or whatever the bankers (the parents) choose to allow.

Some families have developed a 10-20-70 formula, meaning give 10% (there is something truly beautiful about an eight, or ten, or twelve year old picking a charity or a church or a cause of his own choosing and writing out a check from his own money to “give back”.) save 20% (it’s surprising how quickly kids can catch on to the concept of compound interest), and live on the other 70%. Basically, with this kind of family economy, some kids are learning lesions that their parents still have not learned.

The ideas outlined here are just that, ideas. The best family economies are developed and tailored by parents to meet their own situation and their own particular ways of doing things. The important thing is that there be a clear and well understood way for kids to earn “their own” money by doing things for the common benefit of the family, and that they then be given the opportunity to learn to spend, save, and give with that money.

When we speak to parents’ groups, we often schedule a “return visit” in order to follow up, answer questions, and see how they are doing with the ideas we recommended in our initial presentation. The creativity and individuality that parents come up with on the family economy are truly amazing. For example, one dad (who was a building contractor and developer) rushed up to us on our second visit and excitedly told us that “The family economy is really working, and my kids have so much more initiative and motivation than they did, and they really take care of their stuff now.”

“Well, that’s great” we said.

“Yeah” he said “but you know, we don’t use that peg board stuff.”

“But that’s how the kids earn their money” we said, “That starts the whole ownership that makes the system work.”

“Nah”, he said, “Not in our economy. What we do is, on Saturday morning, I make out a list of the jobs that need to be done, and the kids each bid--by sealed bid—and the low bid gets the job.”

Hey, whatever works! And whatever fits best with what you are used to and familiar with.

We’ve seen variations on the bank, on the checkbooks (some families have even devised family credit cards, because they think checkbooks are out-dated, and their biggest worry is helping their kids be responsible with consumer credit), on the amounts paid, and saved, and given. But the important thing, again, is the transferring of ownership, and with it, the transfer of motivation, of discipline, of decisions, and of initiative.

The essence of a simple family economy is Ownership! It is the prerequisite and the fundamental key to responsibility. And giving kids ownership via money of their things, of their savings, and of their ability to give can be the fore-runner of giving them ownership of their goals, of their education, and of their lives.