The Family Bank

AuthorHouse

Contents

Our Bank Members Never Fail......................................................................ixSection I: Opening The Family Bank...............................................................1Chapter 1 The CEO and the Mentor (and the Parent): Understanding the Mindset.....................3Chapter 2 The CEO................................................................................6Chapter 3 The Mentor.............................................................................11Chapter 4 The Parent: Retaining your Identity....................................................22Chapter 5 Setting up The Family Bank.............................................................26Section II: Moving and Controlling Money.........................................................47Chapter 6 Savings Account........................................................................53Chapter 7 Checking Account.......................................................................59Chapter 8 Automatic Teller Machines (ATM)........................................................63Section III: Family Bank Employment..............................................................67Chapter 9 Searching for Employment...............................................................71Chapter 10 Building a Resume.....................................................................85Chapter 11 Preparing for the Interview...........................................................96Chapter 12 The Interview.........................................................................110Chapter 13 The Callback..........................................................................115Section IV: Professional Development.............................................................117Chapter 14 Rules of the Daily Grind..............................................................121Chapter 15 Vacation and Sick Time................................................................127Chapter 16 Write-ups.............................................................................131Chapter 17 Termination...........................................................................136Chapter 18 Bonuses and Raises....................................................................142Section IV: Paying Bills.........................................................................145Chapter 19 Lunch Money...........................................................................149Chapter 20 Rent..................................................................................151Section V: Managing Money........................................................................153Chapter 21 Credit and Your Credit Score..........................................................159Chapter 22 Interest..............................................................................173Chapter 23 Credit Cards..........................................................................178Chapter 24 Loans.................................................................................190Section VII: Entrepreneurship....................................................................199Chapter 25 Starting Up the Family Bank Small Business............................................203Chapter 26 Creating the Business Proposal........................................................206Chapter 27 Presenting the Business Proposal......................................................212Chapter 28 Running The Family Business...........................................................219Section VIII: Life Long Financial Success........................................................221

Chapter One

Both the CEO and the Mentor are literal positions in The Family Bank. Everything you do teaches your kids lessons about life, but in this case you have actual roles in The Family Bank as a Mentor and a CEO, in order to teach your children specific lessons about money and about the financial world. Let's take a look.

Congratulations! You've just been promoted to Corporate Executive Officer (CEO) of the most important business organization in the world: The (insert your family name here) Family Bank! Unlike Wall Street, The Family Bank's worth is determined by the "values" gained by your children, as they are your primary investment. Thus, being the CEO is important, but your #1 priority is to be an individual Mentor to each of your children. No two bank customer's needs are the same, and neither are the needs of each of your children. Each of your bank's members will have his own individual strengths and weaknesses, talents and needs; therefore, your job is to identify these needs and be a Mentor to each of your kids. We'll discuss how to do this in a minute, but first a word about how to not lose your identity as a parent while playing the roles of Mentor and of CEO.

It's important to explain up front that you will play the role of both the CEO and the Mentor (and also the Parent), but never at the same time. The Parent is not a specific role in The Family Bank; you will just work the roles of CEO and Mentor around being your child's parent.

The CEO runs The Family Bank, but the Mentor teaches your children how the bank works, how the financial system works and all the intricacies of finance. The CEO does not teach your children lessons, just like the CEO of any corporation is not going to sit you down and teach you how to not lose your money to his company. So, you are never going to "mentor" your child as the CEO; however, keep in mind that you are still always her parent. As a parent you create rules for your children that apply and are enforced at all times. Incorporating your roles as the CEO or as the Mentor will never trump your role as a parent. In fact, they will compliment it. The roles of CEO and of the Mentor are creations that enhance your power and ability to teach lasting and important lessons.

As a parent you set rules for your children, such as, "No buying candy without parental permission first." So, when you and your daughter are at the grocery store and your daughter decides to test the boundaries of the Family Bank by purchasing candy with her Family Bank Account, without your permission, what can you do?

Real banks don't stop you from making bad financial decisions, so you won't stop your daughter from spending her money, either. You will allow her to buy the candy without complaint and give her a receipt for her purchase (as the CEO). After she has purchased the candy, you will immediately confiscate it, because it is contraband and you did not give her permission to buy it (as the Parent). You will then take quick notes in your day planner of the details of the transaction and your thoughts on the matter, so that you can discuss her financial decision making process with her at your next Weekly Meeting (as the Mentor), which we will discuss in Chapter 3.

Now, if you're anything like me, the idea of not regulating your child's purchases on the spot is probably giving you pause right about now. Fear not! Chapter 4 will discuss this apparent dilemma thoroughly, and fully explain the reasons behind allowing your child to make her own financial decisions and mistakes.

So you see, each role in The Family Bank is distinct and separate, but they all work together in harmony around you being her parent, to successfully teach all the valuable lessons The Family Bank has to offer.

Chapter Two

The CEO is a literal position. When you are running The Family Bank and Financial System you are the CEO of a major company. You manage money and you receive a service for the paychecks you give out. You also make money on interest from your clients. It's important to think of yourself as a CEO and to keep track of what your business is worth. You want to be able to post your profits, so that your bank members can see exactly how much of their hard earned money they are losing to you in interest.

You will play the role of the CEO at all times, except during the Weekly Meetings. The Weekly Meetings are the only time you play the role of the Mentor. The technical aspects of your position as CEO are simple; you run every aspect of The Bank. When you and your daughter are at the store and she wants to buy something, you will facilitate the transaction. (We'll cover how each type of transaction works in its respective section: for example, credit card transactions are in the Credit Card chapter.) When your son wants to apply for a loan at The Family Bank, he will come to see you, the CEO of The Family Bank, at The (your last name) Family Bank and fill out an application. Basically, as the CEO, you handle all of the technical transactions regarding The Family Bank.

Moderation—

So far, we have discussed that The Family Bank is a teaching tool. Within The Family Bank you will teach your children the financial lessons they need to learn by using the roles of the Mentor and the CEO. Without getting into economic theory, your theme of mentoring will be along the lines of "moderation and calculated risk"; whereas, as the CEO, you are a business professional, teaching your children how to be business professionals. As the Mentor you will directly teach your children financial lessons, but as the CEO you will indirectly teach your children how the real world works. Teaching children about moderation is a complicated task, which requires both a Mentor to guide your child, and a CEO to emulate the real world.

Little Mr. Reckless needs you to guide him to create a manageable budget, whereas Little Miss Thrifty needs to learn that it's important to fulfill her "social obligations", such as buying birthday presents, even if it means she has to work a little overtime to pay back a small loan. Credit is an enormous part of our economic system, and learning how to use it can't be ignored in The Family Bank. Therefore, as the CEO, you will often find yourself in a position where you can explain the benefits of credit to your daughter. But keep in mind that when she is applying for a loan, you will only be pointing out the positive aspects of credit. As the Mentor, you will explain to your son the concept of credit and how it can help him and how it can hurt him; but as the CEO, you will explain the "terms and conditions" of said credit when your son is sitting down in front of you in your office and filling out an application. As the CEO, you will both run your Family Bank and give your children the technical knowledge they need to properly use and understand the tools of The Family Bank.

Inevitably the topic of credit brings us to a point of contention. We will cover how to use credit in The Family Bank in depth later, but for now we need to discuss its relevance to The Family Bank and Financial System. After all, utilizing credit and charging interest is how you will make money as the CEO. Some people believe that you "NEVER buy anything you don't have the money for right now", whereas some people believe that "I breathe, therefore I swipe plastic". Most of you are somewhere in between those extremes. If I tried to go into detail about which philosophy is better here, I would make most of you mad and I'd waste hundreds of pages trying to defend myself. So, regardless of your personal views, my point here is simply that the purpose of The Family Bank is to teach your children how the system works. The only way to teach them how it works is to talk to them about it and then let them use it.

I understand if you believe that credit is evil and I understand if you never want your kids to ever take out a loan for anything, but if you decide to cut out the credit portion in order to shield them from making loans with The Family Bank, then all you are doing is creating a huge hole in your child's knowledge and understanding of the real world. A hole that they will inevitably fall into face first at age eighteen, which is the opposite of the outcome we are aiming for. Cutting out or controlling your children's ability to obtain and use credit would also make you a terrible CEO! So, I strongly encourage you to create your bank as realistically as possible and let your kids make the mistake of getting into debt over their heads while they are still with you. Let your inner CEO run wild! Let them learn the hard lessons while their credit scores still aren't real. Let them feel what it's like to get everything they want for a day and then work their little butts off for a year to try and pay it back; only to miss a payment, have their collateral repossessed and have to work for another year to rebuild their credit.

Sound harsh? I promise you, your kids won't even blink at their dropping credit scores (at first). In fact, the responsibility of being CEO of The Family Bank will stress you out infinitely more than it will stress out your kids. Be forewarned, though, this would all be for nothing if your kids didn't encounter hard times sooner or later. Those times will likely come when their credit has been shot for a year and they haven't shown the slightest bit of care about it, or until they can't buy any presents for their family or friends at Christmas, Eid, Hanukkah, or whichever holidays you observe. Then they'll begin the process of understanding the importance of moderation and fiscal responsibility.

I have not been trying to pick on the thrifty here, by spending so much time convincing you to utilize credit in The Family Bank. I'm just trying to get the point across that your Family Bank is a full financial system and the basics included in this book are the minimum skills required for your kids to be successful in the real world. How they implement these skills is still largely up to you. The bottom line here is that you are the CEO of The Family Bank, and CEO's want to (and live for) making money. So make money! When your kids use the bank, let them use all of it. Your bank is modeled after a real bank for a reason. As painful as it might be to let them make financial mistakes, remember, they have to make those mistakes in order to learn from them.

Chapter Three

As the Mentor, you will need to observe each child's behavior and general attitude toward money, and keep a journal of your observations. At the end of each week you will have a Weekly Meeting where you will sit down with each child individually and go over all the financial transactions he made that week, discuss any questions he has about anything you have taught him and teach him any new lessons you want him to learn that week. I will discuss the Weekly Meeting in detail in the next section.

Record keeping is extremely important in both your roles as CEO and as Mentor. Keep a journal (more details about your journal later) of every transaction for each bank member, but also take notes in your journal about the types of decisions that your kids struggle with and how they resolve those struggles. For example, let's take Christmas, or any holiday you observe, that maintains the social obligation of the giving of gifts. In this story you have two children, each of whom have not saved enough money this year to buy presents for their family members. The oldest, let's call her Miss Thrifty, might not want to take out loans from The Family Bank to buy presents, because she doesn't want to face the interest charges. You note that Miss Thrifty follows the mantra, "don't spend money I don't have". On the other hand you note that your youngest, let's call him Mr. Reckless, has no qualms about going into massive debt to buy everyone everything they want this year. Mr. Reckless' mantra is, "as long as the bank will lend it to me, then it's okay for me to take it; after all, they're the bank and they wouldn't give me money they thought I couldn't pay back". So, you will keep notes about the financial decisions your kids make and how they come to these decisions.

Different people naturally handle money in different ways, and keep in mind that days after your daughter completes a financial transaction you won't be able to remember all the details, so get used to writing everything down. This is why your notes are so incredibly important; your notes will be your guide during your Weekly Meetings. Also, by the time your kids graduate from high school you should have at least ten years' worth of transactions and financial decisions the two of you will sit down and analyze, reminisce over and probably laugh until you cry. I'll go into greater detail later, with suggestions on how to handle different scenarios as a Mentor, but for now it's important just to understand that each child is different and that you must take good notes and mentor each child individually, based on his or her unique needs. You are a Mentor and each child is a unique customer.

The Weekly Meeting—

The recording of your journal, whether electronically or the old fashioned way, is so that you can review your notes before your scheduled Weekly Meeting, which will last approximately 30 minutes; let's say Saturday morning from 8am to 8:30am, or anytime during the week that is convenient for both you and your child.

Is a Weekly Meeting really necessary? Yes, the Weekly Meeting is absolutely imperative! If you can't commit to a Weekly Meeting then stop reading and put this book down right now ... are you still here? ... good. Okay, so we're agreed that you are committed to your children and, therefore, to the Weekly Meeting. Great, now I'm not joking here, I want you stop reading for a moment, hold this book or e-reader out in front of you and shake it up and down three times ... go ahead ... I'll wait. Okay, good, we shook on it; so you are now committed to a Weekly Meeting with each of your kids for somewhere around thirty minutes ... each ... individually.

Although you are the CEO of your bank, you are also a Mentor. I continue to make this distinction because it's important that these roles are understood, by all parties involved, to be completely separate roles. You are both, but never both at the same time. When you are the CEO you are not the Mentor, and conversely, when you are the Mentor, you are not the CEO. This will be hard to do at first, but in the end you don't want your children (through transference) believing that outside corporations will pull them aside and give them good "parental" advice. The job of the CEO, or of any business, is to get you to part with and lose your hard-earned money. The "good guys" are the good guys and the "bad guys" are the bad guys; your children have to learn that the bad guys are never the good guys and conversely, the good guys are never the bad guys! So, during your Weekly "Mentor" Meeting is when you will teach your children the financial lessons they need to learn. At all other times, you will be the CEO, which means you will facilitate financial transactions for you children, such as purchasing an item from a store.

The purpose of these Weekly Meetings is to give focus and direction to your children's educational needs. Although The Family Bank, once established, takes almost no effort to run, your kids can still only get out of it what you put into it. You'll have to spend a little time during the week, at your convenience, thinking about, planning and preparing for your weekly counseling sessions. Your preparation time really only needs to be a few minutes, to figure out what topic you will teach that week. After all, you're already an expert in these matters, so figure out what you want to talk about ahead of time and then just let it flow during your Weekly Meeting.

You're already an expert and you're their Mentor; you just have to focus those superpowers each week. Having said that, The Family Bank and Financial System is also a long-term project, so it's not necessary to cause yourself any more stress than you already have in your day trying to figure out what you're going to teach any one particular week. Some weeks you'll wing it and other weeks you will be genuinely inspired without even trying. As long as you are having a Weekly Meeting you are using The Family Bank correctly; and remember, The Family Bank is not a game, but it is meant to be fun!

One more note on preparation. Your preparation time is your own time, so enjoy it. Think about your kids, what you've taught them up to this point, what they're learning in school that might compliment what you are doing and what lessons you would like to see them start learning. You will automatically identify both the areas where they struggle and the areas where they excel. Take notes during this time and create an outline for your meeting. Some weeks you won't spend more than two minutes preparing, and some weeks, when you're genuinely inspired and have the time, you'll be likely to spend hours preparing. It all balances out in the end. Your forethought and organization during your meetings will instill trust and confidence in your kids, so try to never forget the prep! If this is sounding like too much work already, then think about the importance of your child's future and financial well-being. After all, we're only talking about spending 35 minutes a week with your child, here.

(Continues...)

Excerpted from The Family Bankby Sergio Dinaro Copyright © 2012 by Sergio Dinaro. Excerpted by permission of AuthorHouse. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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