Basic economics is actually pretty easy to understand if you put it in the right perspective. In other words, move it out of the world of abstract concepts and make it concrete. This is especially important for children. Here are ten ways you can make economics easier for them to understand:
1) Don’t give kids an allowance; instead, pay them for chores. The word “allowance” is just a nice way to describe an entitlement system. And we all know what an entitlement mentality leads to. The earlier we attach work to production and pay, the earlier we teach children the economic principle of trading labor for capital.
2) Take them to a farmer’s market or flea market and watch what happens there. It’s just a matter of shifting perspective. The interaction of sellers and buyers, the way prices differ from stall to stall on similar items, the questions of quality vs. price vs. perception. It’s endless what you can learn from watching a simple market in action.
3) Have them ask their grandparents what things used to cost when they were their age. This is the perfect way to show the loss of purchasing power in our money supply (i.e., the results of inflation). Basically, a dollar was worth a lot more back then than it is now. But our government and banking system has inflated our money supply so much that they’ve devalued all our money. Just ask them if they’d rather have $5 and go to a candy story today or $5 and go to a candy store 60 years ago.
4) Get them a copy of Whatever Happened to Penny Candy? - This little book by Richard Maybury is a classic for understanding basic economic principles in a fun and engaging way.
5) Play Monopoly. This is still one of the best games for teaching concepts of real estate, investment, improvement, rent, taxation, managing money, and so forth. Make sure everyone plays by the rules.
6) Help your kids start their own cottage business. Forget the traditional lemonade stand. Instead, help them consider their gifting and think how it can earn money outside the home. If someone has a good eye for spotting a deal, go to garage sales and re-sell stuff on Ebay. Sew or craft and post things on Etsy. Write children’s books and self-publish on Amazon. The internet is just a huge market waiting for entrepreneurs to engage it.
7) Play the Stock Market. Don’t get nervous: you don’t have to spend any real money. Instead, get started with a free account on the website How the Market Works. It includes a virtual stock exchange, currency exchange, and more. Who knows? If your son or daughter gets good enough, perhaps he or she can pay for college!
8) Follow the Tea Party Economist’s Blog – These are bite-size looks at all sorts of economic issues facing our nation. Although written for an adult, you can read through them and find some good principles to discuss. It’s authored by Christian economist Gary North.
9) Show them some good free market websites. These are for older kids, but some might really enjoy surfing around at the Foundation for Economic Education, The Mises Institute, or the Acton Institute, among others. There are thousands of free books, articles, videos, and more. Furthermore, all of these groups have great conferences for young folks.
10) Watch Economics for Everybody. One of the main reasons we created our curriculum was to provide a fun way for kids to learn economics. A number of experts have said it’s a fantastic introduction to key economic concepts and principles. If you haven’t seen the first lesson, watch it here. Or read an overview of all the lessons. Or buy it here. (Even better, it’s on sale!)