Have you ever needed to buy something and didn’t have enough money for it? What did you do? Did you decide not to buy the item, or did you ask your parents to give you some money?
You have another choice. You can borrow money. True, you’ll probably borrow it from your parents (or maybe even a brother or sister). But when you borrow, you also promise to pay it back. That’s very different than asking someone to just give you some money.
Borrowing Terms
Before you borrow any money, learn these words:
- Borrow – to get money that you plan to pay it back
- Lender – the person who gives you the money to use (or lends you the money)
- Loan – the money that you borrow
- Payment – money that you give back after you borrow it
Make a Plan to Borrow—and Pay Back—Some Money
When you borrow money from someone, even if you borrow from someone in your family, you need to decide when you have to pay it back. The best thing to do is to work out a plan with the lender. Put your plan in writing, so both of you will remember what you agreed on.
Your plan should include these things:
- The amount of money that you’re borrowing
- How many payments you have to make
- The amount of money each payment should include
When you decide these things, you will know how long you have to pay the money back.
For example, if you borrow $50, you can pay back $5 each week for 10 weeks. Or you can pay back $25 each month for 2 months.
Whatever you and the lender decide, you must pay the money back when you promise to do so. Otherwise, your lender won’t want to loan you money any more.
Talk it Over
Your parents probably borrow money for at least two things—your family’s house and car. Or maybe you have an older brother or sister who’s bought a car. Talk to them about how important it is to pay back money on time.
