A Kid’s Guide To Borrowing Money
Borrowing money seems like an easy way to get what you want quickly, but it comes at a cost. Understand when borrowing makes sense and why.

April is Youth Financial Literacy Month and to celebrate we’re sharing resources and activities you can use to help guide the children in your life – no matter their learning style. Below you’ll find a video to watch, article to read, questions to discuss, and links to a related comic and activity sheet.
Why Do People Borrow Money?
Borrowing money comes at a cost and that extra cost is called interest. Interest is the extra money you have to repay along with the money you borrowed. If borrowing money costs more, why do people still do it? Here are three reasons why:
Reason 1: They Don’t Want To Wait
It’s better to wait until you can afford something before you buy it. However, some people don’t want to wait. They borrow money they can’t repay right away causing them to go into debt.
Reason 2: They Need To Buy Something Really Big
Remember how it’s better to save money to buy things yourself? This is difficult to do with something as big as a car or a house. By borrowing money, people get to use their car or house while they’re still paying for it.
Reason 3: They Have An Emergency
Sometimes, people need to pay for accidents or unexpected repairs. It’s important to save money in an emergency fund so you don’t have to borrow money the next time an emergency takes you by surprise.
Questions To Discuss
- What’s interest?
- How can borrowing money help you? Give an example.
- How can borrowing money hurt you? Give an example.
- Why is it important to save money in an emergency fund?


Raising Money-Smart Kids
Talking to kids about money is not only acceptable but also encouraged. Use our tips to help your child understand and practice age-appropriate money management skills.
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