🏦 Where Does the Bank Keep It?
Your money is not sitting in a box with your name on it.
🔥 Warm Up — 2 minutes
Ask: “If you give the bank 100 rupees, where does it go? Is there a box with your name on it?” Most children think yes.
“Today we find out what the bank actually does with it — and it is stranger than a box.”
🤖 The Activity — 15 minutes
You are the bank. Your child and two soft toys are customers. Each ‘deposits’ 100 pretend rupees. You now hold 300.
Now a fourth person (you again, in a different voice) wants to borrow 200 to buy a bicycle. Lend it out. You are holding 100 and owe 300.
Ask: “Is that allowed? What happens if all three of us ask for our money today?” Let them worry about it — the worry is the correct response.
🧩 The Twist — 5 minutes
Ask why anyone would agree to this. Then explain: the borrower pays a bit extra back, and the bank gives some of that extra to the people who left money there.
That is interest. Now ask the hard one: “What if the borrower cannot pay it back?” That is exactly the question session 6 was about.
Banking Badge
Worked out that a bank lends out most of what it holds
Parent Notes — tap to expand
▼Fractional reserve banking in its simplest form, and where interest comes from — plus the honest risk that sits underneath it.
- What happens if everyone wants their money on the same day?
- Why would the bank pay you for keeping money there?
- Who decides whether someone is allowed to borrow?
The moment of unease when they realise the money is not there is the lesson. Do not rush past it into reassurance — sit in it, then explain the rules that exist because of it.
If your child asks whether the bank could lose their money, answer honestly: it can happen, which is why banks are regulated and deposits are insured up to a limit. Vague reassurance teaches them to trust claims rather than rules.