Teaching Kids About Debt

My nine year old had a dilemma. She had gotten an invitation to go to the mall with a friend but she didn’t have any money. This was a scenario that I had proposed to her verbatim just a few weeks before. I know in her mind it was just another nagging lecture from mom. “You should do some chores for extra cash because you never know when you might need some money.” Her response of course was, “no thanks I’d rather watch TV.”

When this perfect parenting scenario presented itself I decided (with great restraint) not to say I told you so, but instead to teach her a valuable lesson about debt.

It’s never to early to start teaching kids about debt.

I lent her some money to go to the mall explaining that she would have to pay me back with extra chores. Not chores of her choosing when she felt like it. Like a college kid with a shiny new credit card she nodded without listening grabbing her prize and heading out the door without thinking twice.

I waited a few days until the glow of the mall trip had worn off before I went to “collect.” Not surprisingly I was met with begging and tears. “What? But I want to go to my friends house today. You never let me have any fun.” I explained that “fun in the moment” is what got her into this situation in the first place.  She had dug herself into this hole and now she had to work hard to get out.

I glossed over what interest on debt means because I didn’t want to get into specifics. I wanted her to begin to understand what it means to owe someone and how hard you have to work to pay it back. Was she grouchy doing her chores, yes of course. But the next time I offered a job of folding towels for money guess who was first in line.

What are your creative parenting stories for teaching kids about debt?