In the real world, if you borrow money, you are expected to pay it back, usually with  interest. Our children don’t often have to live in the real world. They prefer to take out loans from the Bank of MOM (BOM).

The Bank of MOM‘s loan application procedure is far simpler that a real world bank. Instead, reams of paperwork to fill out, BOM will accept a polite verbal request and a promise of repayment.

A typical loan application will sound something like this: “Mom, can I borrow ten dollars please. I will pay you back when I get paid next Friday”.

The loan officer at BOM is often distracted by other business related transactions (like getting everyone out the door for school) that she usually doesn’t carefully go over the terms of repayment with the borrower before releasing the requested funds.

Note loan officer trainee: Next Friday, like tomorrow never comes. By the time it is next Friday, it is now this Friday. Be careful to watch for this loop hole (especially if the loan application is made as you are trying to get everyone out the door for school). Ask for a specific repayment date as in Friday the 21st .

In the real world, the amount of funds released to the borrower is the amount of fund that is to be remitted to the bank. The BOM operates on an altered business plan. The following is a typical BOM repayment schedule. Some BOM’s have stricter and more effective collection departments than others.

Amount borrowed                Expected Repayment amount

In dollars

1-5                                                         Nothing. Borrower perceives this amount

                                                                as a gift from BOM for being born.

6-10                                                     50 to 100% if loan officer is persistent

11-19                                                   0 – 100% Loan officer should demand collateral for

                                                                a loan of this amount. Anticipate borrowers to be indigent

                                                               at the expectation of repayment. Hardcore defaulters may

                                                              accuse loan office of not loving them. Unfortunately

                                                               this tactic is very effecting in getting some loan officers

                                                               to forgive the debt, making repayment unnecessary.

20+                                                    Lend only if repayment not expected.

                                                             These are high risk loans to make.

If a child applies to a BOM officer to co-sign a loan for his or her car purchase from a real world bank, consider this request carefully.  There is a 75% chance BOM will become responsible for the loan balance.

Finally, as a BOM loan officer, keep our mission statement in mind: BOM exists to help its borrowers to mature into responsible adults. We believe this policy will yield the greatest long-term benefit to both our borrowers and to our board of directors. Please keep this objective in mind when mapping out your individual BOM loan policies.