Every parent knows that teaching kids about money isn’t just about saving or spending — it’s about giving them the tools to make wise choices for life. One of the trickiest lessons, though, is borrowing. Borrowing might seem simple on the surface — you want something, you don’t have enough money, so you ask to borrow it — but understanding when it’s okay and when it isn’t can shape a child’s financial habits for years to come.
Learning to borrow wisely isn’t just a financial lesson — it’s a life lesson. It’s about understanding value, trust, and consequences. Parents who take the time to guide their children through borrowing decisions help kids see that every financial choice carries responsibility. For additional strategies on teaching financial responsibility, resources like KidsMoney.org offer lesson plans for borrowing and lending that parents can adapt at home.
Borrowing Isn’t Just About Money — It’s About Responsibility
When kids borrow, they’re not just taking an item or money — they’re stepping into a relationship of trust. Even small loans — like borrowing a video game or $5 for a snack — carry responsibility. Borrowing teaches children accountability and the importance of keeping their word.
For instance, when a child borrows a toy from a sibling and forgets to return it, the sibling’s frustration is immediate and real. That moment becomes a teaching opportunity: children see that borrowing is not just about getting something now, but about maintaining trust. Over time, these experiences shape a child’s understanding of commitment, respect, and reliability — essential skills for adulthood.
Parents who frame borrowing as a responsibility rather than a privilege find that children take it more seriously. They learn that borrowing isn’t free, and that it carries a cost — sometimes in money, sometimes in effort, and sometimes in trust. To learn more about practical ways to introduce these concepts, check out InCharge.org’s financial literacy resources for kids.
When Is It Okay to Borrow?
Parents often struggle with this question. The answer isn’t always “yes” or “no” — it’s about context. Borrowing can be appropriate when:
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The child understands what they are borrowing and why
If a child borrows $10 to buy a school project kit, they understand the purpose and can see the benefit. Parents can ask questions like: “Why do you need this? How will it help you?” When children articulate the reason, they start to see borrowing as a tool for achieving goals, rather than just a shortcut to get something immediately. For more ideas, WeAreTeachers provides practical activities to teach financial literacy to children. -
The child has a plan to pay it back
Even if it’s just earning chore money or saving allowance, having a repayment plan teaches discipline. Parents can help children map out a simple schedule: pay back $2 per week, or trade chores for the borrowed amount. This helps children see the connection between work, repayment, and accountability — lessons that carry into adulthood with larger financial obligations like loans or credit cards. -
The child’s borrowing doesn’t hurt someone else
Borrowing a friend’s toy or a sibling’s marker is fine when they return it on time and in good condition. Parents can model examples like borrowing a bike, making sure it’s returned in the same condition. This helps children understand the social responsibility that comes with borrowing — that it’s not just about money, but about maintaining relationships. Discover.com has helpful guides for teaching children about money management in real-world scenarios.
By framing borrowing this way, parents help kids see it as a tool, not a shortcut. Borrowing becomes part of a bigger lesson about planning, thinking ahead, and making informed choices.
Why Borrowing Can Be Helpful
Borrowing isn’t inherently bad. In fact, it can teach invaluable lessons that will serve children for a lifetime:
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Learning Delayed Gratification
When children borrow, they often learn that repayment takes time and effort. Waiting to pay back a loan teaches patience and delayed gratification — critical skills for financial success. For example, a child who borrows $10 to buy a special art kit might repay it over several weeks from their allowance. They learn that some rewards require planning and persistence. -
Understanding Interest and Consequences
Even small examples — like paying back $1 extra when borrowing money — introduce the idea that borrowing has a cost. Parents can role-play interest scenarios, helping children understand that borrowing often comes with consequences, even if they’re minor. This helps children grasp responsibility before they encounter real-world financial obligations like credit cards or student loans. Resources like Shore United Bank suggest fun activities that reinforce financial responsibility. -
Building Trust
When kids borrow responsibly, they earn credibility with parents and peers alike. Imagine a child borrows a sibling’s favorite book and returns it in perfect condition. The sibling learns they can trust the borrower, and the borrower internalizes the value of keeping commitments. This lesson is one that will extend into adulthood — responsible borrowing strengthens relationships, both personal and financial.
Borrowing, when done wisely, becomes more than a transaction — it becomes a chance for children to practice accountability, foresight, and empathy.
Knowing When to Say No
Just as important as teaching kids when they can borrow is knowing when to say no. Saying no isn’t about being mean — it’s about protecting them from poor habits and consequences.
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When the child can’t repay
Letting a child borrow when they have no way to pay back sets them up for frustration and disappointment. For instance, if a child wants to borrow money for a new video game but has no allowance or plan for repayment, it’s better to say no. Parents can explain: “You don’t have a way to pay it back right now, so borrowing isn’t fair to anyone.” This approach teaches accountability rather than creating financial stress. -
When the borrowing is impulsive
If a child wants to borrow for a toy or item they don’t need, saying no teaches them to pause and evaluate their wants versus needs. Parents can encourage children to ask themselves: “Do I really need this now, or can I save for it?” This habit helps children develop self-control and decision-making skills — qualities that will protect them from impulsive financial decisions in the future. -
When it creates conflict
Borrowing that causes fights, whether with siblings or friends, is a cue to step back and reconsider. Conflict over borrowed items is an opportunity to discuss boundaries, fairness, and respect. Parents can guide children to resolve disputes calmly and find alternatives, reinforcing the principle that borrowing should never harm relationships.
Saying no is often the most important lesson of all. It teaches boundaries, self-control, and planning — all essential skills for financial independence.
Practical Ways to Teach Borrowing at Home
Parents can create learning opportunities through everyday experiences:
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Allowance Loans
Offer a small “loan” from allowance money for a larger purchase. Track repayments and discuss interest. For example, if a child wants a $20 toy and only has $10 saved, parents can lend $10 and set a repayment plan. Over time, children learn how borrowing can be managed responsibly and the importance of following through on agreements. -
Borrow and Return
Encourage kids to borrow small items from friends or siblings and return them promptly. This reinforces respect, accountability, and social etiquette. Parents can model proper borrowing behavior themselves, showing children that asking politely and returning items in good condition is standard practice. -
Family Discussions
Talk openly about borrowing in real-life contexts — from borrowing money for groceries to lending tools. Parents can share personal stories about borrowing mistakes or successes, which helps children connect lessons to reality. Discussing borrowing openly fosters a healthy relationship with money. Resources like WeAreTeachers provide activities and discussion guides to teach financial literacy at home. -
Real-Life Role Play
Parents can create scenarios where kids must decide whether to borrow, save, or wait. For example, ask: “If you need $15 for a school fundraiser, would you borrow from your sibling, earn it by doing chores, or wait until you save enough?” This allows kids to practice decision-making in a safe environment while understanding consequences.
The Big Picture
Borrowing is more than money — it’s a life skill. Teaching kids about borrowing early — when it’s okay, why it can help, and when to say no — equips them to make smarter choices as they grow. Parents who invest time in these lessons see the payoff: children who are confident, responsible, and ready to navigate the financial world with integrity.
By treating borrowing as an opportunity to teach responsibility and decision-making, parents help their kids not just survive financially, but thrive. When children understand borrowing, they also understand patience, planning, and trust — qualities that will serve them in adulthood.
The lessons learned from responsible borrowing extend far beyond money. Children carry these skills into friendships, education, and eventually the workplace. They understand negotiation, responsibility, and the value of their word. They learn that decisions have consequences, and that integrity matters in every interaction.
Parents who actively teach borrowing — rather than merely forbidding it — raise children who are equipped to handle real-world financial challenges. By giving children the tools to borrow wisely, parents empower them to make informed decisions, develop trust, and take control of their financial futures.
