Lynn O'Shaughnessy

Even if your toddler's vocabulary is not yet as large as a parrot's, you may already know what billions of other moms and dads understand all too well: Kids want stuff.

Children's ability to let you know what they covet begins at an age when uttering any word with more than one syllable is a struggle. But luckily, toddlers have discovered that one powerful word - mine! - often gets the attention of Mommy and Daddy.

The tyranny only escalates when children have graduated from the grocery cart seats and begin creating havoc in the cereal aisle, where Cap'n Crunch and his sugary buddies beckon, and at the checkout counter, where parents find themselves prying Skittles and Bubblicious out of their youngsters' paws.

There is a way, however, to break this pint-sized focus on materialism. That's one of the messages of the book "The First National Bank of Dad," written by David Owen of The New Yorker. As a dad, Owen decided that many of the rules that financial experts advocate for kids regarding allowance and saving money are lame.

Conventional wisdom, for instance, suggests that kids, once they reach a certain age, should open a savings account at the neighborhood financial institution. Visiting a bank can be mildly exciting, but Owen notes that the novelty of a savings account quickly deteriorates. After all, kids are often forced to tie up their cash for months or years. And what is the reward? Look, kids, the bank has given you $2.09 in interest for the past 12 months! You couldn't even buy the No. 4 value meal at McDonald's for that.

To make saving more exciting and rewarding, Owen established his own bank for his son and daughter. He set up checking accounts on his computer using Quicken and configured the software to automatically deposit their allowances on the first of each month.

To encourage the kids, who were 6 and 10 at the time, Owen made the sort of offer that would cause the shareholders of Bank of America or Wells Fargo to revolt. He told them that any money they deposited in the First National Bank of Dad would earn 5 percent a month in interest. Compounded monthly, that works out to more than 70 percent for the year. Now that's an offer that will make a kid hit the pause button on his iPod.

Originally, Owen's son and daughter had to write a check to withdraw money. He or his wife would hand over the cash and make a notation in Quicken. The check requirement, however, was quickly abandoned for a system that was less of a hassle.


Lynn O'Shaughnessy

Lynn O'Shaughnessy is the author of Retirement Bible.

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