How Mickey and Shamu are Teaching My Child about Loans and Debt Repayment

My 11 year old is learning about loans and debt repayment from Mickey Mouse and Shamu the Whale.  Not your standard financial literacy experts, are they? 

Photo by Brittany Whitlock

Here’s how the situation came about.  The sixth grade class at my son’s school has an optional two night field trip to Orlando, where they will be visiting Epcot and SeaWorld.  The field trip comes with a price tag of $300.  With a family of six, one of whom will be starting college this fall, an optional activity with that kind of cost is not in our family budget.  So…we told our son that he could go on the trip…if he pays for it himself.

He wants to go.  After a thorough discussion, we have decided to loan him the money, but he must repay it.  I helped him list his sources of income that he could use to repay the loan.  His goal is to have it paid off by September 1st.

His Sources of Income:

• Allowance:  He gets $5 a week. 
• Jobs for relatives:  Our kids spend time with their grandparents and other relatives during the summer.  They often have odd jobs that the kids can do, such as washing windows, gardening, washing and waxing cars, etc. 
• Extra jobs around our house:  Once the regular chores have completed, we occasionally have extra jobs at our house that we will pay our kids to do.  These have included:  steam cleaning upholstery, painting, washing/waxing cars, website testing and photography for the blog.
• Sell items:  This particular son has had success in selling some of his items in the past.  He sold his Nintendo DS for $75 and sold several games and toys in our yard sale.  He will be going through games/toys and will be selecting some items to sell this spring.
• Gift money:  His birthday is coming in a few months.  We are giving him an option of putting “cash” on his wish list.  He can opt to use some (or all) of the gift money to pay back the loan.

Keeping track of the loan payments:

We created a unique account in his MoneyTrail account to keep track of his loan repayment.  Anytime he has some income, we will credit his Epcot & SeaWorld account.  Being able to check his progress on a regular basis and record it easily  will help him stay accountable for his commitments.  He had some allowance and cash already to start knocking down the loan amount.  Here is what his account looks like right now:

Paying for their own extra trips is not a new concept to the Whitlock children.  Our daughter and oldest son have both done this in the past.  It takes some planning and dedication but the lessons are so important.  They seem to appreciate the trips more because they do not take them for granted.  They also learn that when you borrow money, you must be committed to paying it back.  I hope that they will remember these concepts when they are faced with loans as adults.

From The Jacobin's photos on flickr.com

Have you loaned money to your children?  Were they able to successfully repay the loan?