1. 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.

2. 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.

3. 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?

4. Economic and Personal Finance Myths?  Myth: Economics is about how to make money, lots of money.

5. 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.

6. 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.

7. 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).

8. Topics for today 1. Wants 2. Opportunity Cost 3. Scarcity 4. Decision Making

9. 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.

10. 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?

11. 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.

12. 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?

13. 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 choice 4. Evaluate alternatives.

14. How to spend birthday money? Criteria  Alternatives ↓

15. How to spend birthday money? Criteria  Alternatives ↓ Soccer ball Video Game Save

16. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game Save

17. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game Save+

18. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game Save++

19. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game Save+++

20. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game Save+++-

21. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game Save+++-+

22. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game + Save+++-+

23. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game +- Save+++-+

24. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game +-+ Save+++-+

25. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game +-++ Save+++-+

26. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball Video Game +-++- Save+++-+

27. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball + Video Game +-++- Save+++-+

28. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball ++ Video Game +-++- Save+++-+

29. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball +++ Video Game +-++- Save+++-+

30. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball ++++ Video Game +-++- Save+++-+

31. How to spend birthday money? Criteria  Alternatives ↓ durable Parents approve Future expense necessary Can share with friends Within budget Soccer ball +++++ Video Game +-++- Save+++-+

32. 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.

33. What We Learned 1. Wants 2. Opportunity Cost 3. Scarcity 4. Decision Making