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The Bank of Mom and Dad Is Closed: Teaching Kids About Borrowing and Paying Back

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Lately, a lot of parents have been whispering the same thing online:

“My kid keeps asking for money like it’s no big deal. Do they think I’m a walking ATM?”


If this sounds familiar, you’re not alone. From subreddit threads to private parenting forums, the question keeps bubbling up. “How do we teach kids (especially tweens) the real meaning of borrowing? Not just “Can I have $10?” but what it actually means to take, use, and return.”


Let’s talk about how to shift that mindset early—and make the idea of borrowing fun to learn and easy to live out.

 

Meet Max and the Mysterious Snack Debt?

Max is 11 and loves the snack bar at school. One day, he forgets his lunch card and asks his best friend Jordan to spot him $5. No big deal—until a week goes by and Max hasn’t paid Jordan back. When Jordan finally asks, Max shrugs, “I’ll get you next week.”

 

But that $5 turns into a sore spot. Jordan feels awkward, Max feels cornered, and neither one learned anything about what a loan really is.

 

What Max needed wasn’t just money. He needed a lesson in borrowing.

 

What is borrowing?

Let’s break it down for kids:
  1. Borrowing means taking something with a promise to give it back.
  2. With money, it usually means you’ll pay it back (sometimes with a little extra called interest).
  3. Grown-ups do it all the time (think car loans, student loans, credit cards), but the rules are clear: you borrow, you pay back, or there are consequences.
A Simple Analogy: The Money Time Machine

Imagine you could borrow money from your future self. That’s what a loan is. You’re saying, “Hey Future Me, can I use $20 today and pay you back later?”


But Future You will say:

“Sure, but I want $22 back. That extra $2 is interest—for the risk and the wait.”


The earlier kids understand that money isn’t just “there” for the taking, the better they’ll be at managing it later.

Game Time: Loan Shark vs. Friendly Fish
 Try this fun at-home activity to help kids “feel” how borrowing works:
 

What You Need:

  • Play money or Monopoly bills
  • A jar labeled Bank
  • A “Loan Shark” sign and a “Friendly Fish” sign
  • Two loan forms (see below)
How To Play:
  • Set up shop: One parent plays the Loan Shark (charges high interest), the other is the Friendly Fish (low interest, more flexible terms).
  • Kids “borrow” different amounts from each lender.
  • They use the money to “buy” small toys or privileges (TV time, snacks, chores they skip).
  • Set a timer for payback. If they’re late, Loan Shark charges double!
What they learn:
  • The cost of borrowing can be sneaky.
  • Paying on time matters.
  • Not all “lenders” are created equal—some are fair, others are risky.
Tips for Parents to make the lesson stick:
  • Use real-life moments to talk loans. If you’re paying off a credit card or car loan, explain it in simple terms. Let them see how you borrow and budget responsibly.
  • Create a Family Loan System. If your child wants to borrow money, write it down. Set a due date. Maybe charge a “late fee” of one extra chore. This builds accountability.
  • Don’t be afraid to say no. “The Bank of Mom and Dad is closed today” can be a full sentence. Kids need to understand money isn’t always available on demand.

Final Thought

Money isn’t magic, and it’s not free. But with the right conversations (and a little role play), kids can start to see borrowing not just as a “yes” or “no” question—but as a responsibility. You’re not just raising a child who knows how to ask. You’re raising a future adult who knows how to plan.

At Kash Kids, we equip children with the tools to make smart money choices for life. Through hands-on lessons in financial literacy, we help kids build confidence, form healthy habits, and understand the value of every dollar. When children learn how money works early, they grow up ready to lead, save, invest, and thrive.

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