financial literacy for the elementary classroom before day one notes sponsored by: maryland council...
TRANSCRIPT
FINANCIAL LITERACY FOR THE ELEMENTARY CLASSROOM
Before Day One Notes
Sponsored by:Maryland Council on Economic Education and Towson University College of Business and Economics.
Common Myths
Myth: The tooth fairy will trade with you – she will give you candy/money in exchange for your old tooth if you leave it under your pillow.
Common Myths
Myth: The tooth fairy will trade with you – she will give you candy/money in exchange for your old tooth if you leave it under your pillow.
Reality: Why would anyone outside of your family want your old tooth?
Economic and Personal Finance Myths?
Myth: Economics is about how to make money, lots of money.
Economic and Personal Finance Myths?
Myth: Economics is about how to make money, lots of money.
Reality: Economics is really about how people make choices when they cannot have everything that they want.
Economic and Personal Finance Myths?
Myth: Economics is about how to make money, lots of money.
Reality: Economics is really about how people make choices when they cannot have everything that they want.
Myth: Personal Finance is about how to make money, lots of money.
Economic and Personal Finance Myths?
Myth: Economics is about how to make money, lots of money.
Reality: Economics is really about how people make choices when they cannot have everything that they want.
Myth: Personal Finance is about how to make money, lots of money.
Reality: Personal Finance is about a set of skills (knowledge) that allows an individual to make informed choices about our finances (how money is spent and budgeted, saving, lending, and the risk involved in each).
Topics for today
1. Wants2. Opportunity Cost3. Scarcity4. Decision Making
What do you want?
Everything – clothes, house, a new car, food, medical care…
Economic wants are desires that can be satisfied by consuming a good, service, or leisure activity.
Therefore, economics is part of our daily lives. And so is personal finance because we are
frequently making decisions about how to spend our money to get these wants.
Opportunity Cost
We are all forced to make choices. Choices always involve costs.
Opportunity cost is the SINGLE most desired good or service that is forgone in order to obtain something else.
Every choice involves an opportunity cost. Why?
Scarcity
Scarcity occurs when there is not enough of something to meet the demand for it. How many people can go on a swing (down a slide) at one
time? What if there are five people but only one cookie?
Scarcity is a problem for EVERYONE! Consumers do not have enough money to buy everything
that their families want. Companies (firms) cannot make enough of a product so that
every child can have one. Schools do not have enough money to buy all of the
supplies that teachers want.
What do you hear?
What do we call it when we do not have enough money to meet people’s desires? You might hear: money is “tight” “mommy and daddy do not make enough to afford all
of those things” “we cannot afford to buy that right now”
How do we handle the scarcity problem? We make decisions about how to use our
resources. What criteria do we use to make this
decision?
Decision Making Model
The process of considering alternatives and analyzing information to make a choice.
Four steps:1. What is the problem?2. List the choices or options to solve
problem.3. Identify what you want to get out of this
choice4. Evaluate alternatives.
How to spend birthday money?
Criteria
Alternatives ↓
How to spend birthday money?
Criteria
Alternatives ↓
Soccer ball
Video Game
Save
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
Save
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
Save +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
Save + +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
Save + + +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
Save + + + -
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
+
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
+ -
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
+ - +
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
+ - + +
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
Video Game
+ - + + -
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
+
Video Game
+ - + + -
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
+ +
Video Game
+ - + + -
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
+ + +
Video Game
+ - + + -
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
+ + + +
Video Game
+ - + + -
Save + + + - +
How to spend birthday money?
Criteria
Alternatives ↓ d
ura
ble
Pare
nts a
pp
rove
Futu
re e
xp
en
se
nece
ssary
Can
share
with
frien
ds
With
in b
ud
get
Soccer ball
+ + + + +
Video Game
+ - + + -
Save + + + - +
What Impacts Decision Making?
We generally assume that all economic and financial actors are rational so all decisions they make are rational.
However, there are many instances where attitudes and assumptions about money influence financial decisions, causing people to behave in unpredictable or irrational ways: Buying more expensive name brand product over
generic. Philanthropy including volunteer work or charity.
What We Learned
1. Wants2. Opportunity Cost3. Scarcity4. Decision Making