Money Lets Me Choose

Background
People's wants are unlimited, yet resources to satisfy those wants are limited. This lesson emphasizes the difficulty of making decisions about what people will choose. Your child will become involved in the decision- making process. He/she will also learn about the difference between goods and services and the difference between spending and saving.

Concepts 
Alternatives, choice, decisions, goods, opportunity cost, services, spending, saving, trade-offs

A.  Lesson
Read the story, Oh, What to Do? to your child. Explain that he/she will help Penny make decisions about what to do with the money she has earned. To help them recognize that he/she already makes lots of decisions every day, and the difficulty of making decisions about the use of money, ask the following questions:

1. In the story, what was the choice Penny had to make? (whether to buy a shirt now or save and buy a bicycle later)

2. Why can't Penny go to the movies and go swimming? (Penny cannot do two things at the same time. She must make a decision.)

3. If Penny decides to go to the movies, what is her opportunity cost? (swimming)

To guide thinking about decision making, ask your child the following questions:

1. What choices do you have to make each morning when you get up? (Answers may include what to wear, what cereal to eat for breakfast.)

2. What other choices do you make when you are in school or day-care? (Answers may include what to play at recess, whom to invite to play with you, or whether to tattle on a classmate.)

 B.  Money Decisions

1. Ask your child to describe the money decisions in the story, Oh, What to Do? (Penny had to decide whether to buy a shirt now or save to buy a bicycle. Penny also mentioned buying a dress for her doll and spending money to go skating.)

2. Together, write an experience chart, listing decisions that your child has made with money.

 C. Goods or Services -  Now or Later?
To help your child prepare for a decision-making and problem- solving activity, ask the following questions:

1. What is Penny's problem? (Penny must find a way to make a wise decision regarding the use of her money that involves the choice between a shirt now and a bicycle later.)

2. What is the difference between spending and saving? (When people spend, they decide to use their money now to buy goods or services. When people save, they decide to keep their money for the purpose of buying goods and services later.)

3. What are goods and services? (Goods are things that people can touch or hold. Services are acts that people do for other people.)

4. How does Penny's choice include the decision about whether to spend or save? (Penny can decide to spend her money now by buying a shirt. She can decide to save her money to buy the bicycle she wants at a later time.)

5. Is the shirt that Penny wants to buy a good or service? (a good)

6. Is the bicycle Penny wants to buy later a good or service? (a good)

7. What services were mentioned in the story, Oh, What to Do? (Mr. Lopez pays Penny for the service of walking his dog. When Penny went ice skating, she bought a service.)

8. Ask your child to name some goods and services that your family buys. (Answers will vary.)

D.  A Penny-Wise Activity

1.  To reinforce the "how" of decision making, introduce Pocket Decisions, Activity Sheet , as a helpful way for your child to examine Penny's problem. Using the apron, emphasize that the process can be used for many problem-solving situations. Explain that when a choice is made, the most favored alternative not chosen is the opportunity cost.

2.  Have your child write Penny's problem in the bottom pocket of the apron. (spend now or save to spend later)

3.  Tell your child to write "shirt" as one of the alternatives on the apron. He/she should write "bicycle" as an alternative in the pocket on the other side of the apron.

4.  Have your child write positive reasons (happy faces) and negative reasons (sad faces) for the shirt and bicycle.

  Good Points Bad Points
shirt looks good outgrow
bicycle ride to places may get stolen

 

5.  Ask your child to include what is positive and negative about spending now or saving to spend later.

  Good Points Bad Points
spending now satisfy wants money will be gone
spend later getting something bigger and better (more enjoyment) waiting (doing without what you want

 

6.  Ask your child to tell what decision he/she thinks Penny should make and why.

7.  Review with your child how a decision is made. Look closely at Penny's problem. She faces the problem written on the bottom pocket. There are two alternatives: the hirt and the bicycle. As your child considers each alternative, he/she will recognize that there is a process involved in making a choice. As he/she writes the positive (happy faces) and negative (sad faces) reasons for spending or saving, your child is expressing the benefits and costs of each alternative as he/she seek a solution to Penny's problem.

E. Responsible Decisions

1. Discuss the word responsibility, guiding your child to understand that Penny was trying hard to make a wise decision. Tell your child that a responsible decision is one that looks at the trade offs involved in a problem before making a decision. Explain that this is why Penny is discussing her problem with Mr. Lopez.

2.  Emphasize that Penny was showing a sense of responsibility by not letting the money that was burning a hole in her pocket cause her to make an unwise decision.

3.  To help your child personalize an understanding of responsibility, ask the following questions:

When have you shown that you are responsible in your decision-making by looking at trade-offs involved in a problem before making a decision?

adapted from "Money Lets Me Choose", Personal Finance Economics: K-2: Pocketwise, National Council on Economic Education