How To Teach Your Children the Consequences of Borrowing Money (FREE Download)

Teaching Your Children About Money Series - Laurie's Story

Sooner or later, your child will be presented with the chance to borrow money.  We love our children, so it is our job to teach them the consequences of their decisions.  Sometimes that means sticking to our guns in order to give them a taste of what the real world is like.   Today’s story is no exception.

Photo Credit: Jonathon Colman (Creative Commons)

Today we are joined by my friend and fellow blogger, Laurie.  When she is not helping others with advice on practical finance, writing ebooks, or homeschooling her four children, she tends their Midwestern hobby farm her family moved to to step away from suburban life and live more self-sufficiently.


Please tell us a little about yourself and your family.

My name is Laurie Blank, I’ve been married to Rick for nearly 19 years.  We have four children, three girls and a boy, ages 15, 12, 10 and 9. I’ve been a stay-at- home mom for 15 years and have worked from home in a variety of positions. For the last 3 years or so I’ve been a freelance writer and virtual assistant. I also homeschool our four children.

What teachable moment regarding your children and money would you like to share?

We are currently working our way out of tens of thousands of dollars in consumer debt. My husband and I were never taught how to manage money as children, so we are intent on teaching our children how to manage money well.  We teach them about the importance of saving, making value-based purchases and avoiding debt.

One of the most teachable moments with our children happened when our oldest daughter was about 10. She wanted a new bow – a pink one, of course – for her archery lessons. The bow cost $250. We weren’t in a position at that time to spend $250 on a bow, so we made her a deal: she could spend what savings she had at the time (about $125) on the bow, and we would borrow the remainder of the money to her, interest free. The caveat was that she had to pay us back each week from her earned income (from doing chores) until the debt was paid in full.

It took her nearly 9 months to pay back that money. She absolutely hated having to give up the majority of her weekly earnings to pay “the man” each week for 9 months straight. It placed so much stress on her.

What was the most rewarding part of the experience for you?

The most rewarding part of the experience for us was when she told us “I’m never borrowing money again.”

What was the most challenging part of the experience for you?

The most challenging part for us was watching her suffer as she bore the psychological burden of the debt and struggled with having little to no spending money each week. It was so tempting to bail her out by forgiving the loan, but we knew we couldn’t. We knew we had to let her learn this lesson.

When you were a child, what was your favorite money moment?  (Could be your first “job”, saving up for something, giving, writing your first check, etc.) 

I started working quite young, and I’ll never forget the power I felt as I held my first paycheck in my hands. I grew up in a very poor household, and now I finally had the money to buy the things I wanted to buy.

Let’s say a young couple with a newborn sits beside you on a bus.  They lean over and ask you, “What are the three most important things we should teach our child about money?”  What do you tell them?

  1. Teach them the importance of value-based spending.
  2. Teach them that it just doesn’t matter what the Joneses or anyone else thinks about how they live their lives.
  3. Teach them the power of compound interest, both in regards to debt and in regards to saving/investing.



For more great info from Laurie, visit her blog, The Frugal Farmer, or download her free e-book, How to Teach Your Kids About Money. It’s a short, easy read with lots of valuable advice for parents to teach their kids about money management.

This article is part of a series called “Teaching Your Children About Money”.  Do you have a teachable moment about your children and money to share?  Email me directly at lauraharris(at)piggybankdreams(dot)com.

Join the Discussion:  When did your parents dish out tough love to teach you an important lesson? 


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3 thoughts on “How To Teach Your Children the Consequences of Borrowing Money (FREE Download)

  1. I love my parents, but I wish they had taught me more about finances. Getting into good money habits has become something my husband & I have had to really work on in the last year.

    • Talking about money was SO taboo back then, Katie. It was considered “impolite” to ask people about money and to talk about your own money. I think that taboo is a major reason so many people are in the financial messes they are in today, and I’m so very glad things are changing!

    • I think so many people our age can repeat that exact first sentence you just said, Katie. And it’s like Laurie said, it just wasn’t something parents talked about. So glad you and your husband have opened up this topic for discussion. It’s not always fun, but it will grow you both! 🙂