A Kid’s Guide To Spending Money

Find out how to determine if what you’re spending your money on is worth it by calculating the value of what you didn’t buy.

April is Youth Financial Literacy Month and to celebrate we’re sharing resources and activities you can use to help guide the children in your life – no matter their learning style. Below you’ll find a video to watch, article to read, questions to discuss, and links to a related comic and activity sheet.

What Is Opportunity Cost?

You make many choices every day. You choose how to spend your time, energy, and even your money.

Did you know that every choice you make has an opportunity cost?

An opportunity cost is the value of the options you didn’t choose.

For example, let’s say you spend $20 on a new book. You could’ve spent that $20 on many other things, like a poster for your room or a meal at a restaurant. Instead, reading has more value to you than a poster or a fancy meal. As a result, the opportunity cost of buying the book is a bland wall and eating at home. To you, the new book is worth the opportunity cost.

Some choices you make have value even when they aren’t very fun. For example, there’s an opportunity cost to reading this blog right now. You could be doing something more fun, like watching cartoons or making up a new dance. You decided that learning has more value to you than a cartoon or a dance – at least for now!

Questions To Discuss

1. Other than money, name two other things you choose to spend.
2. What’s opportunity cost?
3. What’s a choice you made today?
4. What was the opportunity cost of your choice?