All Activities
Take out a loan

Take out a loan
Green highlight

Role-play taking out a small pretend loan using play money, create a repayment plan, calculate simple interest, and track payments on paper.

Orange shooting star
Download Guide
Collect Badge
Background blob
Challenge Image
Table of contents

Step-by-step guide to role-play taking a small pretend loan using play money, create a repayment plan, calculate simple interest, and track payments on paper

Here at SafeTube, we're on a mission to create a safer and more delightful internet. 😊

Financial Literacy for Kids | Learn the basics of finance and budgeting

What you need
Adult supervision required, calculator (optional), colouring materials, paper, pencil, play money

Step 1

Pick a pretend thing you want to buy with your loan like a bike a game or a craft kit.

Step 2

Choose how much pretend money you will borrow and write that number on your paper as the loan principal.

Step 3

Choose an interest rate per year (pick a percentage like 5% or 10%) and write that percentage on your paper.

Step 4

Choose how many years you will take to repay the loan and write that number on your paper.

Step 5

Convert the interest rate into a decimal and calculate the total simple interest using I = P × r × t then write the interest amount on your paper.

Step 6

Add the interest amount to the principal to find the total amount to repay and write the total repayment amount on your paper.

Step 7

Decide how many payments you will make (for example how many months) and write that number on your paper.

Step 8

Divide the total repayment by the number of payments to calculate each payment amount and write the payment amount on your paper.

Step 9

Draw a payment tracker table on your paper with columns for payment number due date payment amount amount paid and remaining balance.

Step 10

Take the play money equal to the principal to represent the loan and record "Loan received" and the starting balance in your payment tracker.

Step 11

Make a payment using play money then record that payment and subtract it from the remaining balance on your tracker.

Step 12

Share your finished loan plan payment tracker and what you learned on DIY.org.

Final steps

You're almost there! Complete all the steps, bring your creation to life, post it, and conquer the challenge!

Complete & Share
Challenge badge placeholder

Help!?

What can we use if we don't have play money or a calculator?

If you don't have play money, use real coins or cut paper into pretend bills and still 'take the play money equal to the principal', and use a smartphone or basic calculator to do the I = P × r × t calculation.

What should we do if we get the interest or payment amount wrong?

If the numbers don't add up, re-check the 'Convert the interest rate into a decimal' step (divide the percent by 100), recompute I = P × r × t, add the interest to the principal to find the total repayment, and then re-divide by the number of payments.

How can we change the activity for different ages?

For younger kids, pick a small whole-number principal, a round interest rate, a one-year term, and count payments with play money on a big drawn payment tracker, while older kids can use monthly payments, exact decimals, due-date columns, and try compound interest or a spreadsheet for more challenge.

How can we make the loan activity more interesting or educational?

Have the child write a mock loan contract, try making extra payments to watch the 'remaining balance' drop on the payment tracker, add rules like late fees, and decorate the tracker before sharing the finished loan plan on DIY.org.

Watch videos on how to role-play taking a small pretend loan using play money, plan repayments, calculate simple interest, and track payments on paper

Here at SafeTube, we're on a mission to create a safer and more delightful internet. 😊

Loan Basics

4 Videos

Facts about loans and simple interest for kids

📆 A repayment schedule shows each payment date and how much goes to interest versus how much pays down the loan balance.

🧾 Making extra payments on a loan can shrink the principal faster and reduce the total interest you pay.

💰 Simple interest is calculated with I = P × R × T (interest = principal × rate × time).

📝 Tracking payments on paper is a great way to practice budgeting and see progress as the loan gets paid off.

🕒 With simple interest you only pay interest on the original loan amount—not on interest that has already accrued.

How do I set up and run a pretend loan role-play activity with my child?

Start by choosing a small loan amount and a simple interest rate (e.g., $10 at 10% for one month). Explain loan terms, then have the child “borrow” play money. Help them write a repayment plan with dates, payment amounts, and interest calculation (simple interest = principal × rate × time). Each repayment, record the payment on paper, subtract from principal, and discuss consequences of late or missed payments. Keep it playful and debrief afterward.

What materials do I need for the pretend loan activity?

You’ll need play money or coins, paper or a simple ledger, pencils, and an eraser. Optional items: calculator for older kids, printed worksheet or chart, envelopes for monthly payments, sticky notes for reminders, and a ruler to draw columns. If you want visual aids, use stickers to mark paid months. No real bank accounts or personal financial data should be used—keep it entirely pretend.

What ages is this pretend loan and repayment activity suitable for?

This activity works for ages about 6–14 with adjustments. Ages 6–8 can practice counting, splitting payments, and tracking money with hands-on help. Ages 9–11 can handle simple interest and basic repayment schedules. Ages 12–14 can calculate rates, compare repayment plans, and use a calculator or spreadsheet. Always adapt language and numbers to your child’s math level and offer guidance for tricky steps.

What are the benefits of doing a pretend loan activity with my child?

Role-playing a loan builds financial literacy, math skills, and planning ability. Kids learn budgeting, consequences of borrowing, and the concept of interest and repayment discipline. It encourages responsibility, communication about money, and confidence in handling numbers. The activity also offers a safe environment to make mistakes, practice negotiating terms, and discuss saving versus borrowing before they face real financial choices.
DIY Yeti Character
Join Frame
Flying Text Box

One subscription, many ways to play and learn.

Try for free

Only $6.99 after trial. No credit card required

To create a safe space for kid creators worldwide!

Discovery Tools

DIY Wiki

DIY TV

Creativity Tools

How to draw

Teacher Tools

SafeTube

DIY Blog

2025, URSOR LIMITED. All rights reserved. DIY is in no way affiliated with Minecraft™, Mojang, Microsoft, Roblox™ or YouTube. LEGO® is a trademark of the LEGO® Group which does not sponsor, endorse or authorize this website or event. Made with love in San Francisco.