Have you ever had to choose between something you really want and something you actually need? Do you know the difference between a need and a want? Don’t worry, Frankie Finance is here to help!
Knowing the difference between a need and a want can help us make smart choices with our money. Let’s start with needs. A need is something you must have to live, like food, water, a place to live, and basic clothes. A want is something that would be nice to have but isn’t necessary for living. For example, toys, games, or those cool sneakers your favorite athlete wears are wants.
Most of the time, when you make decisions about money, you’re choosing between needs and wants. That’s why it’s important to know the difference. If you have to choose between eating today or buying a new video game, the choice is easy: you’ll pick food! But sometimes, you have to choose between two wants. This is called an opportunity cost. An opportunity cost is what you miss out on when you choose one thing over another.
Let’s look at Frankie as an example. Frankie wants to buy new rollerblades that cost $85. She has earned $45 from mowing lawns and selling lemonade, and her grandma gave her $20 for her birthday. She finds out the rollerblades will be on sale for $65 on Friday. But, her best friend invites her to a superhero movie with friends on the same day. The movie, popcorn, and soda will cost $20.
What should Frankie do: buy the rollerblades or go to the movie? If she buys the rollerblades, she won’t have enough money for the movie. If she goes to the movie, she won’t have enough money to buy the rollerblades on sale. Frankie has to decide what she values more: the rollerblades or the fun time with friends. She also needs to think about whether she wants to spend all her $65 or save some.
These choices are personal, and they aren’t life-or-death decisions. It’s about picking what matters most to you. If you had to choose between rollerblades or hanging out with friends, what would you pick and why?
Next time you have to choose between options, try making a list of pros and cons. This will help you make smart money decisions using your financial literacy skills!
We hope you had fun learning with us! Visit us at learn.org for lots of free resources and helpful tools for teachers and homeschoolers.
Needs and Wants Scavenger Hunt: At home, look around and make a list of five things that are needs and five things that are wants. Share your list with a family member and explain why you categorized each item as a need or a want. Discuss if there are any items you disagree on and why.
Opportunity Cost Role Play: With a friend or family member, role-play a scenario where you have to choose between two wants. For example, pretend you have $10 and can either buy a toy or go to the ice cream shop. Discuss what you would choose and what the opportunity cost would be. Then, switch roles and try a different scenario.
Create a Savings Plan: Imagine you want to buy something special, like Frankie wants to buy rollerblades. Make a plan for how you could save money to buy it. Think about ways you could earn money, like doing chores or helping neighbors. Draw a picture of your savings goal and write down your plan to reach it.
**Sanitized Transcript:**
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**Financial Literacy for Kids: Part One – Needs and Wants**
Have you ever had to decide between something you want and something you need? Do you know the difference between a need and a want? No need to worry, Frankie Finance is here!
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Determining the difference between a need and a want can help us become better at practicing financial literacy. Let’s start with needs. A need is something that is essential, meaning you require it to survive, like food, water, shelter, and basic clothing. A want, on the other hand, is something that would be nice to have but is not essential for survival. For example, items used for recreation like toys or games, or that new expensive pair of sneakers that your favorite athlete wears.
Most of the financial decisions you will make involve needs or wants, which is why understanding the difference is so important. If you are deciding between whether you will eat today or buy a new video game, the decision probably seems simple: I’ll take the food, please! But sometimes, you will have to choose between two or more wants. This is called an opportunity cost. An opportunity cost is the cost of missing out on the option you did not pick.
Let’s use Frankie as an example. Frankie wants to buy a new pair of rollerblades that cost $85. She has earned $45 from mowing her neighbor’s lawn and running her own lemonade stand, and her grandmother gave her $20 for her birthday. She finds out that the rollerblades she wants will go on sale for $65 for one day only on Friday. Later that day, Frankie’s best friend invites her to go see the latest superhero movie at the theater with some friends on the same Friday the rollerblades will be on sale. The movie, popcorn, and soda will cost around $20.
What should Frankie do: buy the rollerblades or go to the movie? If she chooses the rollerblades, she won’t have enough for the movie with her friends. On the other hand, if she chooses to go to the movie, her opportunity cost is missing out on the rollerblades being on sale, which means she will not have enough money to buy them. Frankie must decide what works best for her: buying the rollerblades on sale or going to the movie with her friends. She also needs to decide if she wants to spend all $65 of her saved money or just part of it.
These decisions are personal, and the consequences are not life-threatening; it’s about choosing what you value the most. When you decide between rollerblades or friends, what would you choose and why?
The next time you are deciding between two or more options, try making a list of pros and cons and go from there. Before you know it, you will be making financially responsible decisions using your financial literacy skills!
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We hope you had fun learning with us! Visit us at learn.org for thousands of free resources and turnkey solutions for teachers and homeschoolers.
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