You probably don’t want your kids to forever think of you as the Bank of Mum and Dad, but when your kids are young, acting like a bank could teach them valuable lessons about interest, debt and other money matters.
Picture: MIKI Yoshihito
Forbes offers a few examples of real like lessons you can teach when kids are about the age of 8. For interest, for example:
Interest has two sides: it’s either something you pay when someone lends you money or something that you earn when you lend money to someone else. Elizabeth Grahsl, Vice President of Prosperity Bank says, you would earn interest if, for example, “your sister runs out of her allowance but needs money this weekend. You could lend her $20 but charge her $2 in interest, which she will have to pay you back next week.” You can also make it into a game to illustrate how it works: Ask to borrow a few dollars from your child’s piggy bank and then set up a schedule to pay it back over the next month with interest.
Likewise, if your kid really wants something at the store and they don’t have money on them, you could let them borrow money from you on “credit”. If they don’t pay it back immediately, start charging interest.
They also suggest applying a tax to their allowance and putting the money into a family expense jar, but you might want your kids to enjoy their childhood without the cruel experience of taxation.