Suggested Target Age: Grades 5-8

Source: Powell Center for Economic Literacy

Topics Covered: cost-benefit analysis, short and long term goals, budgeting, biblical stewardship

Time required: 30-45 minutes

What Will the Students Learn?

• how to make long and short term savings goals
• how to make a savings plan to reach those goals.
• through a short discussion of Cambodia (or another poor country), that there are people in this world who are desperately poor.
• with planning, they can give to the poor and still get things for themselves.
• Students will practice analyzing the costs and benefits of alternatives.

State Content Standards Key
California: History and Social Science: 12.1.1, 12.1.2, 12.2.4. Mathematics: Number Sense 2.0
Florida: Social Studies: SS.D.1.2.1, SS.D.1.2.2, SS.D.1.2.5, SS.D.1.3.3, Mathematics: 3.2, 3.3.3.
Indiana: Mathematics: 5.2.5, 5.2.6, 6.2.1, 7.2.1.
Virginia: Civics and Economics: CE.9, CE.10. Mathematics: 5.3, 5.4, 6.8, 7.5, 8.3.

Materials Needed:

• Short description, series of pictures, set of data, news articles about poor people in one of the world’s developing countries.
  
• 1 copy per student of Exercise 3.1, Exercise 3.2, and Exercise 3.3.
• Deuteronomy 15:10 – 11
  

Definitions:

Income: payment people receive for the resources they provide for the production of goods  and services
Spending or Expenditures: payments for goods or services.
Savings: income not spent on current consumption.
Cost/Benefit analysis:  comparison of what is given up and what is gained in making a decision
Budget: a plan to manage income, spending and saving.

Lesson Plan:

1. Review the economic concepts of:  scarcity, opportunity cost, trade off, income.

2. Review the fact that people have both short-term and long-term wants.  List on the board examples of short-term and long-term wants.

• What might happen to long-term wants if we satisfy all of our short-term wants as they come up?
• Which long-term wants are harder to satisfy?  Why?  It is harder to satisfy long-term wants that take longer to save for.
• What must we do with our money in order to satisfy our long-term wants?  Save

3. Not all of our wants are personal. Discuss what kinds of wants we might have that would not be personal. Help the students think of wants that are social and spiritual.

• How do we plan to satisfy our social and spiritual wants?

4. Read Deuteronomy 15:10-11.   What does the Bible tell us about ways that we can fulfill our spiritual wants to do God’s will?

5. Let’s investigate some of the places in the world in which people are desperately poor.

• Can you think of a poor country in the world?  (Give a short discussion, presentation, or reading about an extremely poor country from the list students generate.  Try to emphasize characteristics of people’s lives that students will understand and find memorable; for example, short life spans, infant mortality, lack of clean water, etc.)
• Is there poverty in your city?  What is the same and what is different for poor families and not-poor families in terms of scarcity, choices, opportunity cost, and income?

6. Suppose that you wanted to give up some personal wants in order to help the poor.  What trade-offs would you have to accept?  What tools would help you to meet your goal? 

Planning is important when saving for a long-term goal.  Today, we’re going to look at two important planning tools:  cost/benefit analysis and budgeting.

7. Read the following story and fill out the cost/benefit chart below.

Tory is 12 years old during the summer before seventh grade.  He has many things that he wants to do during the summer and he also wants to play on the school football team at the end of the summer and into the fall.  Of course, all of the things he wants to do require money – and Tory knows that he’ll have to earn it! His mother told him that she can give him a home and food, but that he must earn money to satisfy his other wants.
Tory started his own lawn-mowing service last summer.  Three neighbors each pay him $10 to mow their lawns once a week while school is out for the summer.  He also makes $15 a week for taking his grandmother’s dog for a walk twice a day.
The summer is 11 weeks long.  Here are the things that Tory would like to do.
Tory spends $1/day to go to the swimming pool.  He likes to eat lunch at the pool every day because the pool has great onion rings, chilly dogs, and root beer.  His lunch is $5 a day.  If he takes his lunch to the pool, it’s free, but that is no fun and all his friends eat pool food.
He also likes to go to the movies with his friend, Henry, every Saturday.  The movie ticket is $8 and the charge for popcorn and a drink is $6. 
He needs a bus pass to get around and passes cost $5 a week for kids. 
At the end of the summer he wants to go on a trip with a friend’s family to an amusement park on Lake Erie for two days.  It will cost him $120.  He also needs to get some football cleats.  They are $80.

                  Questions

1. Does Tory have short-term wants?  What are they?

2. Does Tory have long-term wants?  What are they?

3. In what ways would a budget and savings plan help Tory?

Exercise 3.2
Fill out the charts below, using the information from Exercise 3.1

Exercise 3.3
Use the information from the charts in Exercise 3.2 to answer the following questions.

1. Are Tory’s total summer expenses larger or smaller that his total summer income?

2. Do a cost/benefit analysis of Tory’s short-term expenses.  Which expense should he give up and why?  What’s the opportunity cost to Tory of giving up that expense?

3. How much money does Tory need to save each week in order to have enough money at the end of the summer for the trip and the football cleats?

4. Write a weekly budget (spending/savings plan) that will insure that Tory has enough money to achieve his short-term and long-term economic wants.

Budgeting and Stewardship:

• Discuss with students the biblical attitude toward giving.  How does the freedom to give to the poor relate to planning their spending?
• Discuss with students how controlled, planned spending not only helps them buy what they really want, but leads to lower expenses - which leads to not having to work long hours to pay bills - which leads to freedom to have time to do ministry.
• Discuss with students a long-term expense that would help them meet their spiritual wants and give relief to the poor – perhaps a class donation to a local charity or food bank.

Have each student write down two needs in the world – whether in our country or another – to which they would like to give money. Have them find out more about related organizations and ways to give to that need, and have them bring that information to the next class.

Making Your Own Budget: For an activity with more material about biblical stewardship that allows the students to make their own budgets, see Budgeting Lesson 1.