Have you ever loaned anyone money for something? It may have been the movies or even lunch. What were your expectations on the return of that money or were there any? Was it someone you knew well? We all have “loaned” others money. What if it was your family, specifically, your teenage grandchild? What if they actually earned money from you each month and then asked you, “can I borrow $20 for the movies?”
I would be interested in what your reaction would be and you can comment below. I would also like to see how your reaction possibly changed if I shared the rest of the story with you.
It is not my intention to get that personal with this. One of my clients shared this true story with me a couple of weeks ago and it immediately peaked my interest.
This child, coming to grandma, likely knew what the reaction would be – she would leave with her $20. However, grandma is changing and told her grandchild she would have to pay her back and the teenager agreed. That is when I heard the story.
My advise to grandma, since she already made the loan? First, deduct the repayment from what the child earns next month. Yes, this grandchild earns money for the work that she does. However, in addition to the money owed also withhold $2-3 of interest. That will get her attention on borrowing. Then it hit me – withhold an additional $10. That would make the payback $30. I know, I heard you, you said I was “cruel” for suggesting that. Truth is, you may be right.
However, if this teenager learns about debt at her age now it may prevent her from making the same mistakes you and I have made with debt. Most of us typically learn from the pain we experience. If you and I had experienced the pain earlier, we may be much wealthier now.
The extra $10 you ask? Why would I suggest that? No, it was not a way for the grandmother to make money, but a way to teach those who think that they can borrow like the government, that there is a cost and often it can be very expensive. It may keep her away from a payday loan shop in the future!
If you had been grandma, or even mom/dad, what would you have done and why? Leave your comments below.