Not too long ago, my son wanted to buy a book. He only had about half the money he needed, since he had recently made a larger purchase. For the first time ever, he asked me if he could borrow the money, and then pay me back. I was hesitant, because I don’t like the idea of teaching him that he can just get money for things he wants now by borrowing.
However, after some thought, I decided that this could be a good learning experience. I explained that, like Monopoly, if he’s going to borrow money, he’s going to have to pay extra in interest. So, even though he was borrowing $7, he would need to repay me $8. I told him it would come out of his allowance (after he paid his charity donation and savings), and he had to repay the debt before he could buy anything else.
He agreed, and has been kind of bummed ever since. Instead of watching money grow in his spending jar each week, he has to give all his money over to other obligations. Even worse, in his eyes, is the fact that it’s taking longer to repay me because he owes an extra dollar in interest. An extra dollar! That dollar is going right to my pocket for me to buy candy, instead of him being able to get that big candy bar he wanted the other day.
Right now, he is making grand declarations of never borrowing again. The whole exercise has made a big impression. Hopefully, we won’t have repeats of this borrowing situation later on because of this experience. However, if he does ask to borrow money later, there is a good chance that interest will be charged.
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