- Single class period
Although students will have no personal experience of borrowing from a financial institution they should be able to explore the reasons for borrowing. If you want to buy something that you can’t afford right now, you can either save for it or borrow the money. In this lesson, students will explore what it means to borrow and will look at the reasons why people borrow money from financial institutions.
Activity One: Borrowing
1. Write the word ‘Borrow’ on the white/blackboard.
2. Ask students to brainstorm occasions or contexts when they borrow.
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.
Activity Two: Why borrow?
1. Divide the class into pairs.
2. Invite each pair to write a list of the things that they think people generally use their loans for.
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.
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.
Distribute one copy of Student Worksheet: Borrowing FAQs to each student.
Invite students to imagine that they work for the CCPC and their job is to provide answers to frequently asked questions from people who are thinking about borrowing/applying for a loan.
They should write the replies to each question into their worksheet.
TIP: Depending on your class you might wish to tell students that the answers to the FAQs are available on the CCPC's website: www.ccpc.ie/consumers/money/loans/applying-for-a-loan/
The steps for reviewing this homework task are given at the start of Lesson Nine.