Customer Reviews

The First National Bank of Dad: A Foolproof Method for Teaching Your Kids the Value of Money

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I bought this book because I saw it recommended on a finance website. I was hoping for different ideas dealing with how to teach kids about money.

The first half of this book was great and talked about the author's experience teaching his kids and how he was able to motivate them to save because they wanted to (not because he thought it was the "right thing to do"). He also talks about giving them a safe environment where they can have good and bad experiences with money while they are young and the consequences are still limited. I like his philosophy and his explanations. The first half did a great job offering a new perspective on teaching kids.

The second half was simply too basic for what I wanted. Very basic explanations on "what is a stock" and "what is a mutual fund". This would be helpful if you didn't know anything about these and had to explain it to kids but the explanations were extremely basic.

I couldn't put the book down during the first half but then I couldn't stay awake during the second half.

The author's most illuminating insight is this: Children's perception of time is radically different from adults', and thus, their "time preference" is different. When you're eight years old, a year represents 1/8 of your life. Holding on to $20 to earn $0.60 in interest (if you're lucky) is completely undesirable, and parents who force their children to do so are imparting bad money values. In doing this, what they're teaching is that money received should be spent as quickly as possible, before parents can expropriate the cash and put it into "savings" -- a black hole in the eyes of youngsters.

What the author did was create savings accounts for his children that conformed to their perceptions of time. Instead of offering 2-3% a year in interest, he offered 5% PER MONTH interest. This made saving more attractive and taught spending restraint. Additionally, the author and his wife gradually gave more and more financial responsibility to their children as they grew older. One example stands out: While on vacation, the author watched another child beg and plead and throw a fit until his father agreed to buy a $5 tomahawk at a souvenir shop -- the cheap tomahawk was broken before the pair even made it to their car. The author's child, by contrast, since he was spending his own money, and since he had an incentive to save rather than consume, bought a $0.30 item (after negotiating with the shopkeeper). People, including children, make much wiser decisions when they're spending their OWN money.

Additionally, the author talks about how he established a virtual stock exchange (using real money) when his children were interested in stocks. And finally, the book closes with more general (and good) parenting advice, suggesting that parents read even more to their children than they already do now.

I agree wholeheartedly with everything in this book, and intend to implement these ideas with my daughter, who is 19 months at the time I'm writing this review. The book's only weakness is its rudimentary explanation of stocks, mutual funds, and other financial instruments. This is unnecessary since the majority of the audience already understands these concepts, while those who don't need more information than the author is able to provide. No matter, I still strongly recommend this book and endorse the concepts championed by the author.

This is a great book when trying to figure out how you feel about giving your kids an allowance. I read it several years back and recommend it to many preschool/kindergarten age parents. It definitely gets you thinking about your kid and how you want to have them think about money. It was a fast and fairly entertaining read - so much so that my husband decided to check out other books by the author (and wasn't nearly as amused by the other books). I don't bother giving my kids interest as he suggests as they are able to save fine when they have a goal in mind but I did put their allowance on Quicken as it was the only way any of us remembered to track it weekly.

David Owen's Book meshes well with my philosophy on allowance (partially influenced by Alyson Schafer's books). Let the kids have some money and make them responsible for how they spend it. Not that is easy seeing them blow it on stuff that they'll lose interest in a few days later - but I guess I wasn't any different as a 6 year old. The idea is that it's better if they figure it out when it's only small amounts...

[...] to the rescue:

When my daughter got old enough to actually start a virtual bank for her allowance, I was dreading setting up a spreadsheet and conscientiously keeping up with deposits, withdrawals and interest. Luckily I discovered First Kid Bank ([...]) which is a virtual online allowance bank and does everything needed to follow David's approach. You can set up multiple accounts (Allowance, Savings, Charity, etc.), pay interest on a daily, weekly or monthly basis (with different rates for each account) and even cap the interest paid. You can transfer money between account and do most other transactions you'd expect. And it even has a nice mobile interface so that you can easily withdraw money using your smart phone. And it's free (at least for now)!

I had high hopes for this book but, on balance, came away disappointed. While the "FNB of Dad" has some good ideas about helping kids to manage money, the author seems loathe to connect money to the concept of work. Parents are told to give their kids a healthy dose of money (not too much of course) and let them learn, via a high interest rate, not to spend too much and save for things they want. The only thing I could conclude from this approach is that it is geared toward teaching kids how to spend their future trust funds wisely, and that the work-money link is secondary at best. So if you plan to have (or already have) "trust fund babies," buy the book. Otherwise, I would suggest looking elsewhere.