You Can BANK on This! (Part 2)


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Have you ever wandered through a store and noticed that each aisle held something that you wanted? Have you ever had trouble deciding how to spend your money? Did you know there are organized ways to make a decision on how to spend your money? This lesson will teach you different ways to make the best decision!


You will be given an amount of pretend money and you will use two types of graphic organizers to decide what to buy.


Here are your symptoms: you want more than you can buy, you want things and want things and want more things, and you never have all you want.
Confused man
Here is your diagnosis: You have the ECONOMIC WANTS!

Don't worry, everyone has this diagnosis. It's not a sickness. It's just the way we humans are. You see, people's wants are unlimited, but resources are limited. There is only so much cotton, metal, trees, apples, silk, diamonds, fabric, people to make cars, factories to produce DVDs, etc. Even if we had an unlimited amount of money, resources would still be scarce. SCARCITY is the basic economic problem that everyone has!

So, what do you want? I bet we can divide those wants into two categories: goods and services. When you want a good, then you want something that you can hold. Goods are things like orange juice, CDs, computers, basketballs, books, etc. Services are activities that are done to you or for you--things like haircuts, education, entertainment, etc.

If you can't have everything, then you have to make choices on what you want. Do you want to rent a movie or buy the movie? Do you want to buy a sweatshirt or a t-shirt? Do you want that fast-food meal supersized? Do you want your backpack to have a water-bottle holder or a place for coins? That's why we have to choose: We can't have it all!

When you make a budget, you are really making choices on how you want to spend your money. Or, you may make the choice NOT to spend your money. Wow! Even when you don't do anything, you are making a choice!
Man thinking
Scarcity is the reason people must make choices. Are there good choices and bad choices? How do people make right choices or the wrong choices? Is there a trick that someone can learn that will help them make the right decision? YES!

There are several ways to help people make good decisions, but in this lesson you will need to know how to use a decision-making grid.

Let's pretend you have $20 to spend. Your parents want you to save some amount of the $20. You would like to have a shirt, but it costs $25.00. You would like a video game, but it is over $20.00 also. Then there is that CD for $14.00: that will work, won't it? You don't need a decision-making grid for this choice. Most decisions are harder than that.

CD/tshirt/baseball capNow let's say you have that same $20, but you want three things that cost $14.00. How would you decide? This is where a PACED decision-making grid can help. First define the Problem. (What should I buy with my $20?) Then list the Alternatives. (t-shirt, CD, or hat?) Now think about the Criteria you have for your choice. In other words, what do you consider really important about your choice? (Must have money left over to save, must be able to use in school, and must be clothing because you have grown so much.) Then you Evaluate them. Based on your evaluation, finally you make the Decision.

All of the choices will leave you with money left over. You can't wear hats in school. You need t-shirts because you've grown out of your other ones. If you buy the t-shirt, then you have made a wise choice!

Click here to see what your decision-making grid would have looked like: decision making grid

Another way to make wise choices is to list the cost and benefits to each item you would like to buy. The item that has fewer costs and greater benefits is the one you should buy.

A COST is what you give up when you decide to do something. A BENEFIT is something that satisfies your wants. Click here to see how it works on our little problem: T-chart Activity

Looking at all those should make you see that the t-shirt was a good buy. When we budget, we are looking for choices that are wise for the amount of money we have. We also are thinking about what criteria we have before we spend the money.

Sales Tax

The United States government buys goods and services too. Do you know HOW the government buys those goods and services? The agencies pay money for goods and services. So, where do these government agencies get the money? From our taxes!coins and calculator

The United States government has a budget. It has a HUGE budget! Every government agency receives part of the money that people pay in taxes. There are different kinds of taxes. We have income taxes, property taxes, and sales tax. In this lesson, we will talk about sales taxes.

Sales tax is charged when people buy goods or services from a store. When you purchase something, you need to remember to have enough money to also pay the taxes. Different cities and different states charge different amounts of taxes. Some places don't have a sales tax at all!

Now you are ready to see if you can make wise choices! Go to the "Banking on our Future " website. You will have to click on "Guest/Individual Registration" and create a login profile. There will be a short introduction and seperate modules through the site. Once you get to "Budgeting" you will be able to see if you are able to make the right choices regarding your own budget.


Budgeting means you must make choices about spending your money--or even to NOT spend your money. You learned two different ways to help you make decisions about spending or saving your money.


Now that you know how to use a cost-benefit chart and a decision-making grid, see if you can apply these tools to some real-life problems. Think of all the things you would like to buy and pretend you only have money for one or two. Set up a decision-making grid and see what a practical solution would be. How would you go about budgeting your money so that you could purchase those items?


Lots of links on kids and money are at:
Kids' Money Kids' Page

EconEdLink lessons on decision making:
Jelly Belly Jam: A Lesson on Decision Making
Dynamic Decision Making
Hawaiian Economics: From the Mountains to the Sea

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