Since the term "economics" encompasses so many things, you'll have to decide what aspects of economics for kids are appealing to your children and what concepts they are able to grasp. Even the youngest child can understand supply and demand when the theory is attributed to something they are familiar with like cookies.
Basic Economics Explained
Economics is defined as the social science of making, distributing, selling, and purchasing goods. Before you can begin teaching important economics lessons to kids, you need to understand what topics are included in this broad definition. These topics can be your starting point in lesson planning.
Definition of Economics Kids Can Understand
To help kids understand this broad topic, start by asking them to choose any object within their reach at the moment such as a pencil or crayon. Then, explain that economics covers how people:
- Make that object, including what materials are needed and where to find them
- Get the object to stores once they're made
- Decide how much the object should cost and find people who will want to buy it
- Get money to buy the object and decide they want to buy it
Economics for Kids as a Social Science
Economics is not a mathematical science; it's a social science that is often included in social studies lessons for younger kids. It's more about the people involved from manufacturers to sellers to buyers than computing numbers. The trick is to keep everything simple and to keep it relatable to the kids you're teaching. Kids will grasp economic theories more easily when the subject is presented in an easy way and discussed using examples they see in their everyday lives.
Introduction to Money
Money is what people in most countries use to buy things. They essentially trade their money for the goods they want. When introducing the concept of money, use the currency your kids are most likely to use in real life. You can also cover:
- Types of money - What do they look like and how much are they worth?
- Banking - What do banks have to do with money?
- Checks and credit cards - How do they also represent money?
- Making money - Who makes bills and coins and how they decide the value of each?
Supply and Demand
Economics studies the relationship between people and the goods they buy and sell. Supply is the amount of a certain item that is available and made right now. Demand is how many people want the item. In general, there are a few simple rules kids can understand about supply and demand.
- When something is in demand, it means lots of people want it.
- As demand increases or more people want the goods, production increases, or in simpler terms companies need to make more.
- When something is not in demand, production halts or slows meaning companies make less of it.
Want Versus Need
The concept of wants versus needs can be challenging for kids because their developmental level has a focus on instant gratification. Needs are things you can't be alive without such as water, food, and shelter. Wants are the things kids like to have or wish they had, but aren't really needed to be alive.
- In every aspect of economics from manufacturing to buying, people have to make choices between two or more things or options.
- These choices can also be called "trade-offs" because you often have to give up one thing to get another.
- Scarcity, or the low availability of a good, is a factor in determining economic choices.
Economics Lesson Ideas for Toddlers and Preschoolers
Toddlers and preschoolers can begin to learn about the very basic economic principles through role-playing and guided discussions. At this age, you don't need to worry so much about using proper terminology, but rather focus on demonstrating and illustrating the concepts.
Shop for Pretend
Use toy foods, printable play money, and a toy cash register to set up a pretend store at home or in the classroom.
- Kids can help stock the shelves, be the cashier, or play the role of shopper.
- Use small pieces of paper to write out prices for each item.
- As you make purchases or act as the cashier, ask questions about why they picked certain items or if they thought items were too expensive.
Set Up a Mini Manufacturing Plant
Little kids don't really get the chance to look inside a factory except when they see one in a movie or video.
- Collect boxes and other recyclables to use as packing materials.
- Set up a production line where you inspect a toy or pantry item then pass it down the line for your child to pack in a box.
- If you have a small wagon, they can load the packed boxes in a wagon and "deliver" them to the store.
- You can do the same activity with produce by picking toy fruits and vegetables at your "farm" then delivering them to a market.
Make Your Own Money
If you use a chore chart for kids, you can create your own currency to use along with it.
- Use paper and markers to make bills and cutout cardboard circles for coins if you want them.
- Assign a value to each type of money.
- When you write chores on the chore chart, assign each a payment value.
- As your kids complete chores, you can pay them with their fake money.
- Keep a couple small boxes of prize items that cost different amounts where your kids can "shop" using the fake money.
Economics Lesson Ideas for Lower Elementary Students
Elementary school aged kids are ready for more involved economics lessons, but still have shorter attention spans. Capture their attention with multimedia presentations of your topics mixed with hands-on activities that don't take too long to complete.
Shortage and Surplus Scavenger Hunt
Whether you're working in a classroom or at home, this simple scavenger hunt can be used several times throughout the year with different items.
- Choose a few different items that you have a lot of such as crayons, books, or tissues.
- Remove more than half of one or two of these items and add a bunch of extras to the other categories. For example, leave only five crayons in the 64-pack box and take all the tissues from one box and add them to another full box. This will give you a shortage of some items and a surplus of others.
- Give kids some free time to explore the room in an effort to discover what items have a surplus and which are low in stock.
Want Versus Need School Supply Challenge
Illustrate the concepts of wants versus needs and working together as a community with this simple daily group economics activity.
- Assign a worksheet, color-by-number page, or other individual activity.
- Supply exactly enough of the materials each student needs to complete that activity in one large pile.
- Randomly assign some kids as "wants" and others as "needs."
- Instruct the "wants" to take all the supplies they want when they are called on to gather the supplies. Instruct the "needs" to take only the items they need when it is their turn.
- Once all the supplies are gone, discuss why there were or weren't enough.
Holiday Snack Barter Buffet
The next time your class has a holiday party, use all the snacks kids bring in to share as part of your buffet to teach bartering.
- Set out all the snack options on one long table.
- Randomly give each child about three to five of the snacks; it's best if all the snacks are individually wrapped.
- Separate the group into a few smaller groups of two to four kids.
- Each small group gets one turn to stand behind the buffet table and accept trades for their snack from the rest of the class. For example, if Caleb gets gummy snacks, a pack of cookies, and a pack of pretzels he might offer to trade his pretzels and cookies for a pack of mini muffins.
- After everyone has had a chance to barter for the treats they want, discuss the activity.
Economics Lesson Ideas for Upper Elementary Children
Older kids are ready for more advanced economic theories and may actually start an economics curriculum. Kids in this age group are able to handle field trips, reading books about economic concepts, and experimenting with different economic topics through projects.
Bank Account Comparisons
Gather informational flyers or brochures from a variety of local banks and credit unions on the same type of account such as a standard savings account. Kids can take notes or create charts based on each bank's offer to decide which they would choose to use. Ask them to give a brief presentation about how they came to this conclusion.
Money Board Game Tournament
There are tons of board games that include money and other economics lessons. Choose one game and get multiple copies or have each small group play a different game in your tournament. Either way you'll need to create a tournament bracket and assign kids to small groups with a game assigned to each. These games can take hours to play, so you may have to run the tournament over several days. Once you have an ultimate winner, discuss how they were able to win. Consider the variables that could have contributed to winning or losing such as luck, choices, and competitors. Games to try include:
- The Game of Life
- Easy Money
Shopping Field Trip
Take a trip to the grocery store, mall, or any other place where you might purchase goods. As you shop, bring up questions to your children that might help spark a real interest in economic theories. Ask the questions and prompt your children to answer based on what they know so far about economics. Thought-provoking questions include:
- Which items caught your attention right away and why?
- Why do you think people like sales?
- Why do some people carry calculators when they shop?
- Why do you think the mall is busier near payday?
- Why do you think that store advertises some products as "limited quantities available?"
Economics All Around
Kids of various ages will respond well to age-appropriate tactics for learning basic economics. You can go beyond role playing and educational materials regarding economics for kids by using your own spending and earning as examples. Older children may have the capacity to understand the intricacies about the family economic situation, but even younger children can be taught about economics when you turn everyday situations into learning opportunities.