Debt: A friend or a foe?

By Tracy Rabi

Debt is when you borrow money from someone else and promise to pay it back later, often with added costs called interest. It can be helpful or harmful, depending on how it’s used.

It’s like if you ask your big sister for 2,000 shillings to buy a toy because you don’t have enough money right now. You have to pay her back — maybe from your next allowance, with a little sum added as interest.

Debt isn’t always bad. Sometimes grown-ups borrow money to buy big things, like a house or a car, and they pay it back slowly over time. But you have to be careful with debt because if you don’t pay it back when you promised, it can cause problems. People might not trust you with money anymore, and you could owe even more because of extra charges called interest.

Here’s a simple example:

You borrow 1,000 shillings from your friend to buy a cool toy. You agree to pay him back next week when you get your allowance. Next week, you give him back the full 1,000 shillings. That’s good debt management!

Now, how can you practise managing debt well? Only borrow money if you really need something important, not just for fun stuff.

Make sure you know exactly when and how you will pay it back before you borrow. Try saving up first so you don’t have to borrow at all!

If you borrow, always keep a note: "I borrowed 1,000 shillings on Monday, and I’ll pay it back on Saturday."

Learning to manage debt while you’re young helps you become responsible. Good money habits now mean you’ll be a smart and trusted person when you grow up!

In Tanzania, debt is part of everyday life. Students take education loans, hoping to build a better future. Businesses borrow to expand, creating jobs and opportunities. Farmers take loans to buy seeds, fertilisers, and equipment, aiming for a successful harvest.

Even governments use debt! Tanzania borrows money to build roads, schools, and hospitals, improving services for everyone. But if debt grows too much, repayment becomes difficult, leading to economic struggles.

Using debt wisely is key. Borrow only what you need, make a plan to repay, and always understand the costs. Debt should be a tool that helps you grow—not a burden that holds you back!

Tracy Rabi is a children's author and the founder of Kids Finance with Tracy and the Tanzania Youth Entrepreneurship Experience.