financial literacy for the elementary classroom before day one notes sponsored by: maryland council...

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

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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