To prepare Gideon for primary one, we played fun games to learn the concept of money and how to count cash.

Now, in primary school, he comes back with stories about classmates borrowing money. Other parents also share that some kids go around borrowing money from those who don’t dare to speak up. In fact, parents of those who borrow might also be unaware about what’s happening, until someone’s parents raise the matter to their teachers.

Although it’s easy for most kids to simply lend the cash – how can we teach our kids how to react when friends wish to borrow money?

Besides being able to buy food at the canteen and counting the right change, kids need to learn through real-life experiences on what to do when they are put in an unexpected borrowing situation.

How to teach kids about borrowing money?

1. Explain the concept of borrowing

Start off with a simple scenario primary school kids can relate to. For example: “Charles forgot to bring his pocket money and wishes to borrow money from you so he can buy food.” The idea is that repayment is involved, so Charles will need to return the money that he borrowed.

2. Understand from your child how he views the situation

If your child’s classmates wishes to borrow from him, ask him how he interprets the situation and what he did. To a 7-year-old, they may simply lend the money so that said friend gets to buy food and eat. It can be a very simple situation. Perhaps your child may be worried that his friend will be hungry or that he may lose a friend if he refuses to lend. Or, that child might have been rejected by others and thus, your child was the “last resort”. It could also be that the child doesn’t dare to borrow from the teacher. Maybe your child lend him because his friend lent him a pencil before?

Through play pretend and role playing, kids can practise responsible borrowing too.

3. Talk about possible consequences

The ideal situation is that the borrower returns the money. However, I’ve heard anecdotes where kids cook up stories and refuse to return the loan. Some kids genuinely need the money to eat, while some might borrow cash to buy frivolous items from the bookshop that their parents disallowed. Worse, some may flex a bully attitude as a sense of authority. Children may also dangle their friendship on the line.

The worst-case scenarios are when they blatantly lie without their parents’ and teachers’ knowledge. This could result in a more complex situation for your child to handle; at the same time, there may be underlying issues about the borrower where adults may have to intervene.

4. Share what could have been done instead

During the first month of school, his teacher told them that they could borrow from their teachers should they forget their allowance. This is something many schools encourage instead of borrowing from their peers, and to avoid awkward scenarios and possible conflicts.

Likewise, I personally put some emergency money in my son’s school bag, just in case he forgets to bring pocket money.

5. Role play with them

Try setting up a play pretend store where he can “borrow” items and “pay” them back with play money, reinforcing the concept in a fun and engaging way. This allows your child to stretch his critical thinking skills coming up with possible responses as you come up with various potential scenarios.

If your child has already lent the money, how can he ask for it back without sounding rude? You can try responding with different replies as the borrower – from rude replies to brushing off the matter. This gives your child a broader perspective on what might happen too.

Is your child borrowing money from his friends while trying to save up?

It’s okay to say no to lending money – how to decline politely?

Most of the time, kids usually give in to lending because they are afraid of losing a friend or are worried how that friend may perceive them. It can be upsetting to be called “selfish”, “unkind” or “a bad friend”.

Tell your child that being brave to say “no” is perfectly fine when someone asks him for money. Rejection is a choice and is acceptable, and he doesn’t need to please all his friends in school. Learn to respond to classmates who ask to borrow money in a polite and assertive manner.

Here are some examples of how to decline politely:

“I’m sorry, but I don’t have any money to lend right now.”

“I’ve learned it’s best not to lend money to friends. Maybe we can find another way to help.”

“I’m saving up for something special, so I need to keep my money for now.”

“I don’t feel comfortable lending money, but I’m here to talk if you need help figuring things out.”

“Let’s talk to a teacher or an adult about what you need. They might have a better solution.”

Encourage kids to be firm but kind when responding to requests for borrowing money. Instead, they can offer support and suggest alternative solutions to help their classmates without putting their own financial well-being at risk or feel obliged to lend.

As parents, we find ways to maximise children’s ang bao earnings and work out our own financial roadmaps and ensure our loans are at a healthy range too.

If you’re unsure how to go about working towards achieving your desired financial goals and wish to do a financial checkup for yourself, I’m just a phone call or text away to share my knowledge and experience as a mother and financial advisor in Singapore.