Lesson 8. Introduction to borrowing

Note: Depending on your class you may wish to provide the following prompts: borrow a library book; borrow a pen from someone when you forget your own; borrow lunch money from a friend; borrow some of your brother’s or sister’s clothes for a night out, etc.

3.  Explain that there are a number of reasons why a person may want, or need to borrow. For example, the assumption is that there is a reason why you borrow (usually that you don’t have that thing yourself) and there is also the assumption that you take the item or service or money etc. and then you give it back to the original owner.

4.  Ask the class if they were ever in a position where they borrowed something but the original owner wanted something additional in return, e.g. they may have borrowed some clothes for a night out and in return they had to let their brother/sister use one of their computer games.

5.  Explain that when someone borrows money from a bank or credit union this allows them to get something they need/want now, but that they essentially pay for it later when they repay the money to the bank/credit union because they pay with interest. Borrowing money to buy something is therefore more expensive than saving for what you want. It is really important that before you borrow money you think about whether you really need the loan and whether you will be able to repay it.

Note: Depending on your class you might wish to provide one of the following prompts: Holiday, car/motorbike/scooter, rental deposit, school/college costs, mortgage (home loan), etc.

3. Take feedback from a sample of pairs, recording their responses on the white/blackboard.

4. Ask each pair to write a list of reasons why people might borrow from a bank/credit union.

Note: Depending on your class you might wish to provide one of the following prompts: They might want something now and not want to wait; they might feel that they are getting a bargain and that the bargain won’t be around forever; the thing that they want might only be available for a short time; the thing that they want might be a once‑off; they might feel that the thing they want is too expensive and that they would never be able to save for it; they might not have the money right now, etc.

5. Take feedback from a sample of pairs, recording their responses on the white/blackboard.

6. Conclude by explaining that borrowing from a financial institution is neither ‘good’ nor ‘bad’ – it really depends on individual needs/wants – however, it is very important to manage the loan correctly.