Earning, Spending, Saving and Sharing Money

You can trade things you have for things you want. You can also pay with money. These are two ways of getting goods and services.

When a swap works

Goods are things you can touch and use, like apples or shoes. Services are jobs someone does for you, like fixing your bike. In a swap, or barter, each person gives something and gets something. No money is used. Maya gives Leo two stickers for one pencil.

Both people must want what the other offers. Sam has eggs and wants bread. The baker wants milk, so she does not accept his eggs. They cannot make that swap, even though Sam wants her bread.

Agreeing on a swap can be hard, too. How many loaves should a chicken buy? A big thing may be hard to split. You cannot give half a living goat for a small bag of rice.

Why money helps

Money is something people accept as payment for goods and services. Sam can sell his eggs to someone who wants them. He can then use the money to buy the baker's bread. The baker does not have to want eggs.

A price tells you how much money something costs. A book priced at $8 costs twice as much as a $4 toy car. Two toy cars would cost $8. Price labels let you compare things without agreeing on a new swap each time.

A $20 bill is worth $20 because it is official money people accept. Its value does not come from costly paper or ink.

Money you hold and money you cannot hold

Cash is coins and bills you can hold. Digital money is kept as numbers in a bank's records. Paying from that money with a card or phone uses real money. A payment does not become free because you cannot see coins moving.

A currency is a kind of money. The United States uses dollars and cents. The United Kingdom uses pounds and pence. Many European countries share the euro. Countries can have different currencies or share one. Our examples use dollars.

Friends still swap toys or cards when both agree. Buying and selling with money are also kinds of trading.

When people do paid work, they earn money. They use that money for needs, such as food and a home. They may also buy wants, such as a game or a trip.

Making goods and giving services

A baker makes bread, and a carpenter makes tables. They make goods. A nurse cares for people, and a bus driver takes people places. They give services. Both kinds of work can earn money. People may also enjoy their work or like helping others.

Income is money that comes in again and again. Money paid for work is earned income, or earnings. Some jobs pay by the hour. Others pay for each job finished.

Ana gets $5 each time she walks a neighbor's dog. She walks the dog three times this week. Add $5 three times: $\mathrm{\$}5+\mathrm{\$}5+\mathrm{\$}5=\mathrm{\$}15$. Her earnings are $15. A worker earning $12 an hour for five hours earns $60.

Why pay can differ

Jobs pay different amounts. Some need special skills or years of training. Doctors and airline pilots often earn more for work needing that training. Learning skills can help you find different kinds of work.

Children can earn small amounts through extra jobs or a school craft sale. Agree on the work and pay with a grown-up first. Being on time, polite, and careful helps you do a good job.

Other money that comes in

Some families link allowance to chores. Others do not. You can spend, save, or share money from any of these sources.

Grown-ups can receive income from things they own. For example, someone may pay rent to live in their house. Government payments also help some retired people and people who are sick or out of work.

Pay and public services

Part of grown-ups' earnings goes to the government as taxes. Taxes help pay for public schools, roads, parks, and fire departments. Workers often take home less than their full pay.

An ATM does not make new money for you. It gives access to money already in a bank account. Spending it leaves less in that account.

A small business sells something people want. You might make bookmarks or offer car washing. A class business is also called an enterprise project.

Make your plan

First, choose a good or service to sell. List what you will need and its cost. Choose a price and give each helper a job. Someone may make the product, while others sell, count money, or make posters.

Compare your price with similar things for sale. A very high price can put buyers off. A very low price may not cover your costs. You need buyers as well as a good idea.

Count sales and costs separately

Costs are what you spend to run the project. Sales are all the money buyers pay you. Profit is what remains after costs are paid.

Jo and Kim spend $6 on lemons, sugar, and cups. They sell 20 cups of lemonade for $1 each.

1. Find sales: 20 lots of $1 make $20.
2. Take away costs: $\mathrm{\$}20-\mathrm{\$}6=\mathrm{\$}14$.
3. Share the profit equally: $\mathrm{\$}14÷2=\mathrm{\$}7$ each.

The cash box holds $20 from buyers. They cannot each take $10 as profit. First, $6 must pay back the supplies. Only the remaining $14 is profit.

What if fewer cups sell?

The first six cups at $1 each bring in $6. That covers the $6 spent on supplies. With those supplies already paid for, later cups add $1 profit each.

If only five cups sell, sales are $5. Costs are still $6. Jo and Kim spent $1 more than they received. That is a loss of $1. Selling something does not always leave a profit.

Decide what happens next

After the sale, count the money and check the costs. Ask, "What sold well? What would we change?" Perhaps you needed more time to make the product. Perhaps your posters did not tell people the price.

A sale can also help a cause. This is fundraising. A class might give its sale profit to an animal shelter. Money for the cause must be kept separate from money for the sellers.

Your money has a limit. Every dollar you spend is a dollar you cannot use again. Choosing what to buy means choosing what to leave for later.

Needs and wants

Needs help people live and stay safe. Food, water, a home, and warm clothes are needs. Wants are things you would enjoy but can live without. Toys and candy are wants. Put needs first when you plan your spending.

Wanting something strongly does not make it a need. New sneakers are a want if your shoes still fit and work well. A winter coat may be a need, while paying extra for a famous brand is a want.

What do you give up?

Ben has $10. His favorite choices are a $10 ball and a $10 book. He cannot buy both. He chooses the ball. The book is his opportunity cost: the next choice he gives up.

The opportunity cost is not every other thing in the store. It is the next thing Ben would have picked. Another child might prefer the book and give up the ball.

Can you afford it?

You can afford something when you can pay for it and still cover your needs and plans. Mia has $12. A puzzle costs $15. She is $3 short because $\mathrm{\$}15-\mathrm{\$}12=\mathrm{\$}3$. She could save $3 more or choose a cheaper puzzle.

Having the price in your hand is not the only check. Suppose $4 of your $12 is already needed for a class trip. Only $8 is free for a new purchase if you keep that plan.

Use these questions before buying:

• Is this a need or a want?
• What is the price, and can I afford it?
• What else could I do with the money?
• Will I still be glad I bought it next week?

Your money and your choices

People enjoy different things. Books, art supplies, and sports can all matter to different children. Families also have different amounts of money. A friend's purchase does not decide what you can afford.

Some families cannot cover all their needs. Getting help is nothing to be ashamed of.

You can plan a purchase before reaching the store. You can also see something and suddenly want it. That sudden wish deserves a pause before you pay.

Planned and impulse buying

Planned spending means choosing ahead of time what to buy and spend. A shopping list can help. Impulse buying means buying on the spot without thinking first.

Zoe has $8 for a $6 paint set. She first buys $3 of candy. Now she has $5 because $\mathrm{\$}8-\mathrm{\$}3=\mathrm{\$}5$. The paint set is still $6, so she is $1 short. The candy used money she needed for her plan.

A choice has a benefit, such as fun or usefulness. It also has a cost: the money paid and the next choice given up. Ask whether the benefit is worth that cost to you.

Notice what ads are doing

Ads, or advertisements, try to persuade people to buy. They appear in videos, games, on TV, and on signs. An ad shows a product at its best. A toy may look bigger or more exciting than it really is.

Words such as "Hurry!" can make you feel rushed. "Everyone has one!" can make you worry about missing out. Neither message tells you whether the item fits your money or your plans.

A sale still uses money

A lower price is useful for something you were going to buy. Buying an unneeded item on sale still uses money. A sign saying "Save $2!" does not put $2 in your pocket when you buy something you would otherwise leave.

Try one of these ways to slow down:

• Make a list before shopping.
• Wait a day before buying a want.
• Take only the money you planned to spend.
• Ask, "Do I still want this after thinking about it?"

Waiting may show you that a wish has faded. It can also help you see that something still matters to you.

Leave room for surprises

A flat bike tire is an unplanned cost. You did not choose its timing. Keeping some money saved helps with surprises like this.

A game purchase can happen with one tap. Gems bought with real money still cost real money, even inside a game. Ask a grown-up before buying online or in a game.

A low price can be helpful, but price is only part of a good buy. Value means getting something useful and good for the money you pay.

Compare the same thing

The same pack of markers costs $7 at one store and $5 at another. The $5 pack costs $2 less. Because the packs are the same, the lower price gives you the same markers for less money.

Also check quality: how well something works and lasts. A $4 ball breaks after one week. An $8 ball lasts all year. Two of the cheap balls already cost $8, and together last just two weeks. The longer-lasting ball can give better value, even with a higher price.

Look inside the pack price

A larger pack may cost more altogether but less for each item. Find the price of one item to compare fairly.

The large pack gives more pencils for each dollar. But suppose you need just three pencils and have $3. The smaller pack meets your need and costs less in total. A cheap price per pencil does not make a pack affordable.

A bigger pack is not always cheaper per item. Two juice boxes for $2 cost $1 each. Six for $7 cost more than $1 each. At $1 each, six boxes would cost just $6.

Is the price reasonable?

A reasonable price is close to what similar things usually cost. Look at several similar items. If plain pencils nearby are about $1 each, a $9 plain pencil needs a closer look. A higher price can still buy a poorly made item.

Could you borrow or swap?

You do not always need to buy something new. You might borrow a book from the library, buy a used game, or swap a toy. Think about what you will use, how long you need it, and what you can pay.

Saving means keeping money now so you can use it later. You might save for something special or keep money ready for a surprise.

Different reasons to save

A small goal might be a book you can buy in a few weeks. This is a short-term goal. A bike that takes months to save for is a long-term goal. Grown-ups may save for years for college or a home.

The goal's cost and how much you can save affect the time needed. The same book may take one child a week and another child a month. Both children are saving toward something they chose.

An emergency fund is money saved for unexpected costs. A grown-up might use it for a car repair. A child might use some savings to replace a lost library book. You cannot know exactly when a surprise will happen.

Small amounts build up

Suppose you have $2 each week. Spending it on snacks uses $20 over ten weeks. Saving those ten lots of $2 builds $20 for a bigger goal.

You can see the total grow by counting: $2, $4, $6, $8, $10, and on to $20. Saving $1 each week for 52 weeks gives $52. No single dollar has to be large for the total to grow.

Give saving money its own place

Keep it apart from money you plan to spend. You can label a jar, piggy bank, or envelope with your goal. Seeing the label can help you pause before taking money out. Many grown-ups keep savings in a bank.

Money in a jar stays the same amount if nobody adds or takes any. Your total grows when you add more money.

Saving and investing

Investing means using money in a way you hope will earn more later. Buying supplies for a small business is one example. The business may make a profit, but it could make a loss. Investing can lose some or all of the money used.

Saving does not mean you must never spend. Buying your chosen book after saving enough is using your plan. You can also keep money ready without knowing exactly what future need it will cover.

A saving plan turns a wish into steps you can follow. Start with a goal and its price. Then find what you already have and what you can add each week.

Find the amount still needed

Leo wants a kite costing $24. He has already saved $6. Take his savings away from the price: $\mathrm{\$}24-\mathrm{\$}6=\mathrm{\$}18$. He still needs $18, not the full $24.

Leo chooses to save $3 each week. Count six lots of $3 to reach $18. You can also divide: $18÷3=6$ weeks.

Watch the total grow

The starting $6 belongs in the total. After six weeks, Leo has added $18. His starting $6 plus $18 makes the $24 price.

Keep going until you have enough

Ana needs $20 more and saves $3 each week. Six weeks add $18, which is $2 short. Seven weeks add $21. She needs seven weeks because that is the first week with enough money.

You do not stop at the nearest lower number of weeks. Check your total against the price. Having a little extra is enough; being a little short is not.

Help the plan work

Write down each week's money added and total. You can color a savings jar drawing as it fills. Put the saving money away on the same day each week, before spending.

Leo could save $6 a week and reach his remaining $18 in three weeks. Earning extra or choosing a cheaper goal can also shorten the wait.

Taking money out makes the plan longer. If Leo takes out $3 during his six-week plan, he ends with $21. One more week of saving $3 gets him to $24.

Check the price again before buying. If it changes, update your plan. You can also choose a new goal. The savings are still yours.

You can use some of what you have to help others. Giving means offering help or a gift without expecting something back.

Money, things, and time

A donation is money or something else given to help a cause. You might give coins to help animals. You could also give clean clothes you have outgrown or books in good condition.

Volunteering is giving your time and help without pay. Picking up park litter or helping a neighbor carry groceries can help without using money. Little money does not mean little kindness.

Give things that work well and are clean. A broken toy someone cannot use is not the same help as a working one. Think about what the person or group needs.

What charities do

A charity brings money, things, and help together for a cause. Food banks help people get food. Animal shelters care for animals. Other groups plant trees or help sick children.

Think about what matters to you. Animals, nature, and helping other children are some choices. With a grown-up, check that a charity is real and does the work it describes before giving to it.

Gifts show care, too

People give gifts on birthdays, holidays, and other special days. Families in many cultures also give money, food, or presents at weddings, festivals, and funerals. These gifts can show care and help people through an important time.

A gift is different from a loan. Nobody has to return the gift or pay it back.

Plan a gift that fits

A small gift can join others to make a larger amount. If 25 children give $1 each, they give $25 together. One child's dollar is part of that help.

You and your family decide how much to give and which cause to support. Keep money needed for your needs and plans. You might choose to share $1 from each $10 you receive. Planning the gift first helps it fit alongside spending and saving.

Some families do not have enough money for food, a home, or warm clothes. A lost job or illness can make money short. Needing help is nothing to be ashamed of.

People help in different ways

Food banks give food, and shelters offer a safe place to sleep. Charities collect clothes and school supplies. Many schools provide free meals. Government support payments also help people with their needs.

People getting help deserve the same kindness as anyone else. Never tease someone about money. Give things in good condition, the kind you would be happy to receive.

Plan a fundraiser

Fundraising means collecting money for a cause. You could hold a bake sale, collect coins, or arrange a read-a-thon. In a read-a-thon, supporters promise money for each book read.

A clear plan has these steps:

1. Choose the cause and a goal amount.
2. Decide how to raise the money.
3. Tell people what the money will pay for.
4. Run the activity and count the money.
5. Give the money to the cause.
6. Tell supporters how much you raised.

Count what can go to the cause

A class tells buyers that ingredient costs will come from its bake sale money. Ingredients cost $15. The class sells 60 cookies for $1 each. That brings in $60. After paying the $15 costs, $45 goes to the food bank.

Counting all $60 as money available to give would miss the ingredient cost. Costs must be clear to supporters before they give or buy.

A walkathon can work differently. Lily's grandma promises $2 for each lap. Lily walks eight laps, so Grandma gives $16. Each promised $2 has been counted eight times.

Keep the promise

Fundraising money belongs with the cause it was raised for. Use money for costs only when supporters have been told about those costs. Do not quietly take some for a treat or a different cause.

Helping can also mean a food drive, a coat collection, or volunteering. Choose a kind of help the community needs.

Label three jars or envelopes Spend, Save, and Share. Each part has a job. Spend is for now, Save is for later, and Share is for giving.

Choose the parts first

Decide the split when money comes in, before you buy anything. Sara gets $10. She chooses $6 for Spend, $3 for Save, and $1 for Share.

Check the total: $\mathrm{\$}6+\mathrm{\$}3+\mathrm{\$}1=\mathrm{\$}10$. Every dollar has one job. None has been counted twice.

There is no one right split for everyone. You may put more in Save for a big goal. Another week, you may plan a larger gift. The parts must fit the money you have and what you need it to do.

Check a plan that does not fit

Sara considers $6 to spend, $4 to save, and $2 to share. Adding gives $12. She only has $10. Her plan needs $2 more than she has.

Moving labels does not create extra dollars. She could lower spending to $4. Then $\mathrm{\$}4+\mathrm{\$}4+\mathrm{\$}2=\mathrm{\$}10$. That is a new split that fits.

Make equal parts

Omar has $9 and wants the same amount in each jar. Divide $9 into three equal groups: $\mathrm{\$}9÷3=\mathrm{\$}3$. Each jar gets $3. Equal parts work, but they are not required.

Build up over several weeks

Sara uses her original $6, $3, $1 split for four weeks. She sets aside $24 for spending, $12 for saving, and $4 for sharing. These amounts total the $40 she receives over four weeks.

The jars' actual totals depend on what she takes out. If she spends $5 from Spend, that jar holds $19, not $24. Her saving and sharing jars are unchanged.

Moving $3 from Save to Spend leaves $3 less toward her saving goal. She can change her split, but she needs to check how the move changes her plans.

A budget is a plan for money over a set time. It might cover one week or one month. It shows money you expect and how you plan to use it.

Build a budget

Start with all your expected money in. List needs and costs to pay first. Plan saving and sharing next. Then choose wants with what remains.

Kai expects $20 of allowance and $10 for washing a car. His total money in is $30. He writes this monthly plan:

The parts equal the money in, so the budget is balanced. If the parts totaled $33, he would be planning to use $3 too much. That is overspending. He would need to cut some wants or choose cheaper ones.

Money left without a job can go into savings or another goal. A plan need not use every dollar for shopping.

Keep a record of real money

Tracking means recording what actually comes in and goes out. Write the date, what happened, the amount, and what remains. A budget looks ahead; a record shows what happened.

Kai starts with $30. After paying $8 for the trip, $22 remains. He sets aside $12 in savings, leaving $10 available. Giving $3 leaves $7. A $4 comic and $3 snack use that last $7.

Kai now has $0 left to spend from this month's money. His $12 savings still exist in their own place.

Change the plan when needed

Suppose Kai loses $5 before buying the comic and snack. His $7 for wants becomes $2. He can choose a smaller treat and keep his trip, saving, and sharing plans.

Small purchases belong in the record, too. A $1 snack each school day uses $5 in a five-day week. Forgetting it makes the record look as though more money remains.

Compare your plan with your record each week. Grown-ups do this with larger amounts for food, housing, electricity, travel, and other plans.

When you borrow, you get something you must return. When you lend, you let someone use something of yours for a while. Borrowed money must be paid back.

Agree before borrowing

The borrower receives the loan. The lender gives it. Ella borrows $4 from her brother for lunch. Ella owes $4; her brother expects $4 back.

Agree how much is borrowed, when it is due, and how to repay. A clear promise helps both people know what to expect. Paying all of it back on time builds trust.

Plan the payback

Noah wants a $12 game and has $8. He needs $4 more. His mom lends him $4. Noah pays her $2 each week. After two weeks, he has repaid the full $4.

He could instead save $2 each week for two weeks, then buy the game. Borrowing gets it sooner, but the next two weeks' $2 payments are already promised. He cannot plan to spend that same money on another treat.

Borrowing can cost extra

Grown-ups sometimes borrow from a bank for a house or car. They pay the loan back over time. Bank borrowing usually costs extra money called interest. This makes the full amount repaid greater than the original loan.

A credit card is borrowing, too. The bank pays the store, and the cardholder owes the bank. It is not free money. Interest and fees can add to the cost; a card purchase does not always have an interest charge.

Think about both sides

Responsible borrowing means choosing an amount you can repay, making a plan, and keeping the promise. Borrowing more than you can repay, or taking another loan to cover an old one, can make things harder. Talk through a loan with a grown-up before agreeing.

Before lending, think about whether you can manage without the money. A friend might repay late or fail to repay. A grown-up can help you decide. Banks lend as a business and earn money from the interest borrowers pay.

Money can be lost, stolen, or damaged. A regular safe place and a simple record help you look after it.

At home

Choose a jar, piggy bank, or box kept safely in a drawer. Put money back in its place after counting it. Hiding coins in many places makes them hard to find again.

Keep saving money apart from spending money. You might have labeled envelopes in the same safe box. You can find each part without mixing their jobs.

Count your money whenever you add or remove some. Write the new total down. If you recorded $9 but count only $7 later, you know $2 needs checking. A record helps you notice a problem; it does not tell you by itself what happened.

Away from home

Take only what you need for the outing. Keep it in a wallet or a pocket that closes. Leave the rest in its safe place at home. Avoid showing or counting lots of cash where strangers can see it.

Pay attention when putting money away. Leaving a wallet on a store counter can separate you from your money as easily as dropping it on a path.

Banks help protect money

A bank is a business that keeps people's money and records how much each person has. Banks also lend money. Many families keep most of their money there. Cash at home could be lost, stolen, or damaged in a fire.

An ATM lets people take out money already in their account. It does not create more money for them. The record changes when money is taken out.

If something goes wrong

Tell a trusted grown-up right away if money is lost or taken. If you find money, give it to a grown-up who can try to find its owner. Finding it does not mean it is yours to spend.

If someone pressures you to hand over money, you can say, "I need to ask a grown-up first." Move to a trusted grown-up and explain what happened.

A tap can pay for something without moving any coins. It still uses money. It either spends money in a bank account or borrows money that must be repaid.

Keep secrets secret

A PIN is a secret number used with a bank card. A password protects an online account. Keep these secret from friends and strangers. Only the parent or caregiver looking after the card or account should share them with you.

Someone may say, "Tell me your password so we can play together." Friendship does not make sharing a password safe. The password gives access to an account.

Pause at a request

A scam is a trick to get money or secret information. A message may promise a prize or free game items. It may ask for a card number, password, or address. "Act now!" is another warning sign.

If a message like this appears, do not click or reply. Tell a trusted grown-up. A colorful picture or familiar-looking logo does not show that a message is safe.

Look at a game message

Max sees, "Free 1,000 gems! Type in your mom's card number." He closes the message without entering anything and tells his mom. The request for a card number is a warning sign. A promise of free gems does not remove that risk. Some offers called "free" also start charging later.

Never enter card numbers, passwords, or personal details into a site, game, or message unless your parent or caregiver is helping. Personal details include your address, school, and full name.

Real payments need permission

Ask a grown-up before any online or in-game purchase. A small gem pack still costs real money when bought with real money. Several small payments can use a large part of someone's spending money.

Protect the phone and card themselves, too. Put them away safely after use. If a bank card is lost, tell a grown-up quickly so they can contact the bank. Acting promptly helps stop someone else using the card.