Research has shown that if children are taught economics at a young age, they will be able to make smart decisions in future. Parents can make teach their children in different ways such as giving them monetary tasks, playing money-centric board games, giving weekly allowances with monthly targets and having conversations about the economy in a simple manner. Some parents even sign up their children in economics tuition , where they will be able to learn the basics effectively.
Here are few basic economic principles every school going child must know to have a brighter future.
There is no such thing as free lunch
How your family spends their income is the best way to explain this concept. People choose because there is a scarcity of the material. For example, if the family’s income is $1000 and the expenses for the month are $1200, then the family has to make choices about how to spend their money wisely. They can choose to cut down on food, weekly allowances, family outings – all these are choices made to bridge the gap and meet the necessary expenses.
No gain without pain
Your child has to understand that the cost of his education means cancelling a vacation or emptying your savings. This is the concept of cost and benefits in which you need to give up something for what you want to achieve or get. In other words, the all or any choice has the cost of opportunity. If you child understands this he or she will able to understand the impact of studying long hours by cutting down on playing on his or her future.
Supply and demand chain
If there is more supply then the cost of it comes down and when there a demand, then the cost comes up. For example, if you cook one batch of cookies, then everybody in the family will be fighting to finish it off. However, if there three batches of cookies, then since the supply is more, there is no demand. You need to teach them concepts that are simple to understand and are part of everyday life.
The concept of incentives
Incentives are great motivators, especially for children. If you promise your child to buy him or her a cycle for getting good grades, you are motivating him to work hard to achieve the goal and get his or her incentive. Your child is basing his goals based on the incentives offered to him.