Mum and dad plan to get money back
GOLD Coast entrepreneurs Richard and Tonya van der Velde are seeking to put an end to the high default rate for the “bank of mum and dad’’ with their new platform.
PayMyParents is an innovative new business launched a week ago by the van der Veldes to address what they say is a lack of understanding from borrowers about how loans work and what responsibilities they bear.
Mr and Mrs van der Velde are using a subscription model – starting at $9.95 a month – and are aiming to grow the business to have 60,000 users in the first 12 months.
The idea was borne out of
frustration they experienced when loaning funds to their children and finding the money only trickled back.
Mrs van der Velde said for most children paying back Zip Pay or the phone bill was a priority but not mum and dad.
“Money loaned to our children is just as important to repay as their phone bill or Zip Pay,” she said.
“What we found was they owed us money … but we were the last to be paid if they had any money left.”
PayMyParents is platform that manages parent-to-child loans so the whole loan process is documented and managed via a contract, direct debit payments, and a dash
board that shows the progress (or lack thereof) being made.
Mr van der Velde said the platform wasn’t just about repayment of loans – more important is teaching good financial habits.
“As a parent if we loan our kids money we would like it paid back … but more importantly we want them to manage their money, how to grow their wealth and avoid debt traps.”
Mrs van der Velde said the first PayMyParents client was their daughter.
“In the past she borrowed money for different things and it grew over time,” she said. “She was paying it back here and there but not really making good dents in it.”
She said the platform had made a real difference to her financial decision-making.
“She really likes it because she said, ‘I can see my account and what I owe’. She said it was motivating to her.
“Our daughter’s aim now is watching her loan come down … and then she will keep that momentum going and build towards her home deposit.
“She has already changed her way of thinking.”
Mrs van der Velde said the platform was not just empowering for children but parents as well.
Parents don’t need to chase their children for repayments (that is done by PayMyParents with an emphasis on education) while the contract ensures each party has a record of their obligations to draw upon when making decisions on any additional loans.
The platform was originally designed with parents loaning funds to their children in mind, however it can also be used for other loans such as between siblings.
Mrs van der Velde said she sees no reason why the platform cannot take off both in Australia and overseas.
“It does not appear that this has been done anywhere in the world,” she said.
“We are concentrating on Australia initially but it is something you can take worldwide.”