Get this. You’re in the mall, at a video store, or browsing E-bay and find some really cool item you’ve wanted to buy. Hmmm, do you have the cash to cover it? Look in your wallet. That’s just great. You barely have enough money for a candy bar. You know you’ll be earning money soon, so what can you do about it now?

Think. Is there anyone to share the item with? That would cut the cost in half. But, what if you still don’t have enough money. Okay then, who does? What about your parents, grandparents, or an adult friend? Would they be willing to give you a chance to learn about loans?

Sit down with the adult who could loan you the money. Talk about the item you want and how much it costs. Figure out how much money you usually earn in a month. Based on the cost of the item, how long would it take to pay the loan back? For example, if the item costs $100 and you can give $10 every month just divide 100 by 10. The answer is? Yes, 10. You’ll pay back the money in 10 months.

You might offer to give interest, which is extra money you give to the person who gave the loan. How much interest would you give? How do you plan on coming up with the money to pay them back? Should they take the item back if you don’t pay what you owe? Discuss these ideas. Agree on a plan. Follow the plan. Later decide, was the item worth the monthly payments and interest? Would you ask for a loan again?

Think you've got it? Try out this activity and practice what you've just learned.