Money Sense for Kids (Grades 1-5)

A trade at the kitchen table

Leo is seven. He has a red toy car, and he is hungry. His big sister June has a peanut butter sandwich.

"I will trade you my car for your sandwich," says Leo.

June shakes her head. "I don't want a car. I want a book."

Leo does not have a book. So the trade is stuck. Leo keeps his car, June keeps her sandwich, and Leo stays hungry.

What Leo tried to do has a name. Trading one thing straight for another thing, with no money at all, is called barter.

Why barter gets stuck

Barter only works when two people each have something the other one wants, and both want to trade at the same time. Teachers at the Federal Reserve, the part of the government that looks after the country's money, point out how unlikely that match is.

Look at what Leo would have to do to get his sandwich by barter.

1. Find somebody who wants a toy car and also has a book to give away.
2. Trade the car for the book.
3. Carry the book back to June and trade it for the sandwich.

That is two trades and a lot of walking for one sandwich. And it only works if the book person exists.

There is a second problem. How much sandwich is a car worth? If a car is worth half a sandwich, Leo cannot cut his car in half. If a car is worth two sandwiches, June only has one.

Key idea: Barter works only when two people each want what the other one has, and when the two things are worth about the same.

What money fixes

Now give everybody in the house some coins and try again.

Leo sells his car to his cousin, who has always wanted a red car, for 50 cents. Then he buys June's sandwich for 50 cents. June is happy to take the coins, because she can spend them on the book she wants.

Nobody had to find a perfect match. That is the whole trick. Money is something that almost everybody agrees to take as payment. Because everybody takes it, you can sell to one person and buy from a completely different person.

Money does three jobs.

The measuring job fixes Leo's second problem too. Once a car and a sandwich both have a price, you can see straight away whether they are worth the same. A book at 3 dollars costs as much as six sandwiches at 50 cents each.

The point: Money works because almost everybody agrees to take it. That one agreement is what makes buying and selling easy.

Shells, beads and pieces of metal

Money has not always looked like coins and dollar bills. Long ago, people used shells, beads or pieces of metal to pay for things. Those worked for the same reason our money works: the people around them agreed to accept them.

Today money comes in three forms you might see in your family.

• Coins, made of metal.
• Bills, also called paper money or notes.
• Money in a bank account, which grown-ups spend with a card, a check or a phone. You cannot see it or hold it, but it is real money, and it runs out just like coins do.

Who makes the money in your pocket

In the United States, coins come from the U.S. Mint. It is the only maker of the coins people spend. Paper money comes from the Bureau of Engraving and Printing, the only printer of U.S. bills.

New coins and bills travel to banks all around the country. From the banks they go to stores, then to families, and then into your hand.

The coins and bills a country makes for people to spend have a special name: currency. Dollars are the currency of the United States.

Other countries, other money

Not every country uses dollars. Other countries use their own money, with their own pictures and their own names.

Canada's money is called a dollar too, but it is a different dollar from ours, with different pictures and a different value.

When a family travels to another country, they trade some of their dollars for that country's money. On October 9, 2026, one U.S. dollar could be traded for about 18 Mexican pesos, or for about 1.43 Canadian dollars. Those numbers move a little every day.

In a store in Mexico, pesos work. In a store in Ohio, dollars work. This course is all about U.S. money, because that is the money U.S. stores take.

Goods and services

Money buys two kinds of things.

• Goods are things you can hold, like a sandwich, a book or a pair of shoes.
• Services are things people do for you, like cutting your hair, driving the bus or fixing a bike.

Try sorting these.

Here is a quick test. Can you put it in a bag? Then it is probably a good. Does somebody have to do it for you? Then it is a service.

Money runs out

One more idea, and it matters in every lesson after this one. Money is not unlimited.

When Leo spends his 50 cents on the sandwich, those 50 cents are gone. He cannot spend them again on a sticker. The sandwich shop has them now.

So every time you spend, you are also choosing what not to buy. Learning to make that choice well is most of what money sense means.

A note for the grown-up helping

Every activity in this course works with play money or a handful of real coins from a drawer, and none of them needs a real purchase. The course never assumes that a child gets an allowance; where a lesson talks about earning or saving, it offers ways to practice without one. Reading aloud works best in short stretches, stopping at each table to point and count. This is general money education for young children, not financial advice for your family.

Common misconceptions

• Mistake: a bill is valuable because of its paper. A one-dollar bill and a hundred-dollar bill are printed on the same kind of paper, and each weighs about one gram. The paper is not what makes one worth more. Money has value because people agree to accept it.
• Mistake: money in a bank account is not real money. It is real. When a grown-up taps a card, money comes out of an account, or is borrowed and has to be paid back later. It just does not jingle.
• Mistake: dollars work in every country. A shop in Japan wants yen. Travelers trade their money first.
• Mistake: a bank or a store makes money. Banks and stores pass money along. The U.S. Mint makes coins and the Bureau of Engraving and Printing prints bills.

Where this leaves us

• Barter means trading things with no money. It gets stuck unless both people want what the other one has.
• Money is something almost everybody agrees to take as payment.
• Money does three jobs: paying, measuring prices, and keeping value for later.
• The U.S. Mint makes coins, and the Bureau of Engraving and Printing prints bills.
• Other countries use their own money, like the peso, the yen and the euro.
• Money buys goods, which you can hold, and services, which people do for you.
• Money runs out, so spending always means choosing.

Sources

1. Federal Reserve Education. (n.d.). Functions of money [Audio assignment]. Federal Reserve System. Defines money as anything widely accepted as final payment and explains why barter needs a double match. federalreserveeducation.org
2. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades Pre-K to 2, parent/caregiver guide: Lesson 1, Counting coins. Shells, beads and metal as early money; the Mint and the Bureau of Engraving and Printing. fdic.gov
3. Federal Reserve Education. (n.d.). Goods and services [Video assignment, grades K-5]. Federal Reserve System. federalreserveeducation.org
4. Bureau of Engraving and Printing. (n.d.). Currency FAQs. The sole producer of U.S. paper currency; the Mint as sole maker of circulating coins; paper of 75 percent cotton and 25 percent linen; about one gram a note. bep.gov
5. Board of Governors of the Federal Reserve System. (2026, October 13). Foreign exchange rates, H.10 weekly release. Currency names and the rates for October 9, 2026. federalreserve.gov

The smallest coin is worth ten cents

A penny is 19 millimeters across. A dime is about 18. A millimeter is one of the tiniest marks on a ruler, so the two coins are close, but the dime is the smaller one.

Yet the dime is worth ten pennies. That is a puzzle worth thinking about.

So the size of a coin does not tell you what it is worth. You have to learn each coin, the way you learn the faces of the people in your class. This lesson puts all six U.S. coins side by side so you can.

The six coins, side by side

The front of a coin is called heads, and the back is called tails. The U.S. Mint uses fancier words: the front is the obverse and the back is the reverse. They mean the same thing.

Take your time with that table. Point at each row. If you have real coins, put each one next to its row.

Remember: 1, 5, 10, 25, 50 and 100. Those are the six coin values, from the penny up to the dollar coin.

Reading the table: size

Now line the coins up from smallest to biggest. This is where the surprises are.

Read down the Worth column. It does not go up neatly. The dime is the smallest coin but worth more than the penny and the nickel. The half-dollar is the biggest coin of all, but the dollar coin, which is smaller, is worth twice as much.

What matters here: Never judge a coin by its size. A small coin can be worth more than a big one.

Reading the table: edges you can feel

Run your fingernail around the edge of a dime. You will feel tiny bumps, like the grooves on a bottle cap. Those are called ridges, and the Mint calls them reeds. A dime has 118 of them. A quarter has 119, and a half-dollar has 150.

The penny and the nickel have smooth edges. The golden dollar coin has words pressed into its edge.

Why ridges? Long ago, dimes and quarters were made of real silver. Some people filed tiny bits of silver off the edges and sold them. Ridges made it easy to see when a coin had been shaved, so the trick stopped working.

Today the ridges help you in a different way. With your eyes closed, you can tell a dime from a penny by feel: about the same size, but one is bumpy and one is smooth.

Reading the table: heads and tails

Five of the six coins have long shown a president on the front.

• Abraham Lincoln has been on the penny since 1909. He was the first president ever shown on a U.S. coin, chosen for his 100th birthday.
• Thomas Jefferson has been on the nickel since 1938. The back shows Monticello, his home, which he designed himself.
• Franklin D. Roosevelt went on the dime in 1946. He had supported the March of Dimes, a group that raised money to fight a disease called polio.
• George Washington, the first president, went on the quarter in 1932, for his 200th birthday.
• John F. Kennedy, the 35th president, went on the half-dollar in 1964.

The backs change more than the fronts. Older pennies in a jar may show two stalks of wheat, or the Lincoln Memorial building, instead of the shield. Quarters have carried eagles, all fifty states, national parks and famous American women.

The dollar coin is different. Many dollar coins show Sacagawea, a Lemhi Shoshone woman who traveled with the explorers Lewis and Clark, carrying her baby son on her back. Another kind shows the Statue of Liberty, and some older dollar coins show presidents. Dollar coins are rare in change, because since 2012 the Mint has made most of them for collectors.

Coins made for 2026

In 2026 the United States is 250 years old, so the Mint changed some coins for this one year. Look closely at the date on a new coin. Instead of one year it shows two: 1776 ~ 2026.

• The 2026 dime shows Liberty, a woman who stands for freedom, wearing a cap with stars and stripes. The back shows an eagle carrying arrows. In 2027 the dime goes back to Roosevelt.
• The 2026 half-dollar shows a close-up of the Statue of Liberty, for one year only.
• The 2026 quarters come in five designs, each about a moment in American history.

So in 2026 you might find a quarter with Jefferson on it, or one with no president at all. It is still a quarter, still worth 25 cents.

The penny that stopped

On November 12, 2025, at the Mint in Philadelphia, the Treasurer of the United States struck the last pennies made for spending. Pennies had been made for 232 years.

Why stop? Making one penny had come to cost 3.69 cents. That is more than three pennies' worth of money to make one penny.

Here is the part people get wrong. Pennies are still money. The U.S. Treasury says they keep their full value, and you can still spend them. The Mint even makes a small number each year for collectors' sets. What stopped is the flow of new pennies into stores, so some stores now round a cash total to the nearest five cents. Lesson 5 shows how that rounding works.

What coins are made of

• The penny is mostly zinc, a gray metal, with a thin coat of copper on the outside to make it look brown.
• The nickel is three parts copper to one part nickel. So the nickel is mostly copper.
• The dime, the quarter and the half-dollar are made like a sandwich: a copper middle with an outside layer of copper mixed with nickel. Look at the edge of a quarter and you may spot a thin brown line, the copper middle, peeking through.
• The dollar coin has a golden-colored outside, so it looks like gold, but it contains no gold.

Here is a strange fact you can work out from the weight table. Ten dimes weigh 10 times 2.268 grams, which is 22.68 grams. Four quarters weigh 4 times 5.67 grams, which is also 22.68 grams. Two half-dollars weigh 2 times 11.34 grams: 22.68 grams again. A dollar's worth of dimes, quarters or half-dollars weighs exactly the same. A dollar's worth of nickels is much heavier, 100 grams, and a dollar of pennies weighs 250 grams.

A note for the grown-up helping

Real coins from a jar or a purse are ideal here; a child learns coins by handling them. Look together for a 2026 coin with the 1776 ~ 2026 date, and for older pennies with the wheat or Lincoln Memorial backs. If real coins are not handy, play coins work, though they rarely have the right sizes or edges, so the feel test will not work with them. The coin facts in this lesson come from the U.S. Mint and were checked in October 2026; the Mint changes coin backs often, so a design you find may be newer than this lesson.

Common misconceptions

• Mistake: a bigger coin is worth more. The dime is smaller than the penny and the nickel and worth more than both. The half-dollar is bigger than the dollar coin and worth half as much.
• Mistake: a nickel is made of nickel. It is three parts copper to one part nickel.
• Mistake: pennies are not money anymore. The Mint stopped making them for spending, but every penny still counts as one cent.
• Mistake: every coin shows a president. The dollar coin shows Sacagawea or the Statue of Liberty, the 2026 dime shows Liberty, and the Mayflower Compact quarter shows two Pilgrims.
• Mistake: two quarters with different backs are worth different amounts. Every quarter is worth 25 cents, whatever picture is on the back.

What to remember

• The six coins are worth 1, 5, 10, 25, 50 and 100 cents.
• Size does not tell you value. The dime is the smallest coin and the half-dollar the biggest.
• The penny and nickel have smooth edges; the dime, quarter and half-dollar have ridges.
• Lincoln is on the penny, Jefferson on the nickel, Roosevelt on most dimes, Washington on most quarters, and Kennedy on most half-dollars.
• In 2026 some coins carry the dates 1776 ~ 2026 and special designs for the country's 250th birthday.
• The last pennies for spending were made on November 12, 2025, but pennies are still money.

Sources

1. United States Mint. (2026). Coin specifications. Composition, weight, diameter and edge of each coin in current production. usmint.gov
2. United States Mint. (2026). Coin Classroom: About the Mint [Pages on the penny, nickel, dime, quarter, half-dollar and dollar]. The people and pictures on each coin, why dimes have ridges, and dollar coins made mostly for collectors since 2012.
3. United States Mint. (2026). Semiquincentennial Coin Program media kit. The 2026 dime, quarters, nickel and half-dollar, and the 1776 ~ 2026 dual date. usmint.gov
4. United States Mint. (2025, November 12). United States Mint hosts historic ceremonial strike for final production of the circulating one-cent coin [Press release]. usmint.gov
5. U.S. Department of the Treasury. (2025, December 23). Penny production cessation FAQs. The penny remains legal tender and keeps its value. home.treasury.gov
6. National Park Service. (n.d.). Sacagawea. Lewis and Clark National Historic Trail. nps.gov

A blank sheet with red and blue threads

Every bill weighs about one gram, whether it is a one-dollar bill or a hundred-dollar bill. This lesson follows one of them, a five-dollar bill, through its whole life.

Our five begins as part of a big blank sheet at the Bureau of Engraving and Printing, the place that prints all U.S. paper money.

The sheet is not ordinary paper. Notebook paper is made from wood. Bill paper is made from plants that are also used for clothes: three parts cotton to one part linen. Tiny red and blue threads are mixed in, so you can see them if you look very closely at a real bill. That is why a bill feels a little like cloth.

It is tough, too. The Bureau says a bill can be folded forward and then backward about 4,000 times before it tears.

Printed fifty at a time

Nobody prints one bill at a time. Each sheet is big enough for 32 or 50 bills, side by side.

1. First the background colors go on. The five-dollar bill is light purple in the middle, fading to gray at the edges.
2. Next comes the main picture. A metal plate with Abraham Lincoln's face cut into it presses ink into the paper so hard that the ink stands up a tiny bit. You can feel it with a fingertip. This is called raised printing.
3. Then the printer adds the serial numbers, a code of eleven letters and numbers printed twice on the front, plus a black Federal Reserve seal and a green Treasury seal.
4. Stacks of 100 sheets go through huge sharp cutters that slice them into single bills.
5. Machines and people check for mistakes. Then the new bills wait in a vault until the Federal Reserve comes to pick them up.

Worth holding on to: A bill is made of cotton and linen, printed with ink you can feel, and given its own serial number before it ever leaves the printer.

From the vault to your hand

The Federal Reserve is the part of the government that sends new bills out to banks. That is why the bills made today are called Federal Reserve notes.

Our five travels in a sealed bundle to a bank in your town. One morning your grandmother takes some cash out at that bank. She gets our five, folds it, and tucks it into your birthday card.

Now it is yours. In one month it has gone from a blank sheet, to a printing press, to a vault, to a bank, to a birthday card.

Spent, and back again

You take it to a bookstore and buy a book that costs exactly five dollars. The clerk puts the five in the cash drawer.

At the end of the day the store takes its cash to its own bank. Banks send some of the cash they collect back to the Federal Reserve.

There, a fast machine looks at every single note. Bills in good shape go back out to banks. Our five is still crisp, so out it goes again.

Over the next few years it is spent again and again. It buys a lunch. It pays for a bus ticket. It comes back as change at a grocery store. It spends a week forgotten in a coat pocket. Every time it reaches a bank and then the Federal Reserve, the machine checks it again.

Worn out

Bills get folded, crumpled, written on and sometimes washed inside a pair of jeans. One day the machine looks at our five and decides it is too worn to keep working. That bill is taken out and destroyed, and a fresh one is sent out to take its place.

How long did it last? The Federal Reserve keeps track. On average, a five-dollar bill lasts about 5.8 years.

Why does the hundred last so long? Mostly because people do not spend it very often. Many people keep hundred-dollar bills as savings, so they sit safely in one place instead of going from hand to hand.

In short: A bill goes around and around between people, stores and banks, and the Federal Reserve checks it each time it comes back, until it is too worn to use.

Seven bills and their faces

The Federal Reserve sends out seven kinds of bills today. Each one has a person on the front and a picture on the back.

Notice three names you already met on the coins. Washington is on the quarter and the $1 bill. Jefferson is on the nickel and the $2 bill. Lincoln is on the penny and the $5 bill.

Now look for the two people who were never president. Alexander Hamilton, on the $10, was the first Secretary of the Treasury, the person in charge of the new country's money. Benjamin Franklin, on the $100, was a printer, a writer, an inventor and a scientist, and one of the leaders of the young country. Washington, Jefferson, Lincoln, Jackson and Grant were all presidents.

The $2 bill surprises people. It is real money and worth two dollars, but you will rarely see one, because not many are passed around.

Feel it, tilt it, hold it up to the light

People who make fake money are breaking the law, and real bills have special features that are hard to copy. You can check three of them.

On our five-dollar bill, holding it up to the light shows a big faint number 5 to the right of Lincoln, and a thin strip that reads USA and 5. The hundred-dollar bill has extras: a blue ribbon on the front whose little bells change into 100s when you tilt it, and a copper inkwell with a bell that turns green.

If a bill ever looks or feels wrong, do not try to spend it. Give it to a grown-up.

Old bills still count

Bills look different depending on when they were printed. Older ones have smaller faces and fewer colors. That is fine. Every U.S. bill made since 1861 is still good for its full amount, so a five from your grandpa's drawer is still worth five dollars.

A note for the grown-up helping

If you have a bill, let your child do the three checks with it; a $5, $10 or $20 works best. You do not need to own any particular bill: the activity includes a draw-your-own option. Big bills are not needed for anything in this course. The lifespan figures are the Federal Reserve's 2025 averages, and real bills vary a lot with how they are used.

Common misconceptions

• Mistake: everybody on a bill was a president. Hamilton, on the $10, and Franklin, on the $100, never were.
• Mistake: the $2 bill is fake, or not money anymore. It is real and still made. It is just rare.
• Mistake: bills are made of the same paper as a notebook. Bill paper is cotton and linen, which is why it survives thousands of folds.
• Mistake: an old bill stops being money. Every U.S. bill made since 1861 still counts for its full amount.
• Mistake: a bill is used once and then thrown away. The same bill can be spent by many people over many years before it wears out.

Looking back

• Bills are printed by the Bureau of Engraving and Printing on cotton and linen paper, 32 or 50 to a sheet.
• The Federal Reserve sends new bills to banks, checks used bills when they come back, and destroys worn ones.
• A five-dollar bill lasts about 5.8 years on average, and a hundred lasts about 24 years because people keep it rather than spend it.
• The faces are Washington on the $1, Jefferson on the $2, Lincoln on the $5, Hamilton on the $10, Jackson on the $20, Grant on the $50 and Franklin on the $100.
• Hamilton and Franklin were never presidents.
• You can check a bill three ways: feel the raised ink, tilt it, and hold it up to the light.

Sources

1. Bureau of Engraving and Printing. (n.d.). The buck starts here: How money is made. Cotton and linen paper, 32 or 50 notes per sheet, raised intaglio ink, serial numbers and seals, cutting, and the vault where notes wait for the Federal Reserve. bep.gov
2. Bureau of Engraving and Printing. (n.d.). Currency FAQs. One gram per note and about 4,000 double folds before a note tears. bep.gov
3. U.S. Currency Education Program, Board of Governors of the Federal Reserve System. (n.d.). Denominations [Pages for the $1 to $100 notes]. Portraits, back vignettes and security features, and the rule that all U.S. currency issued since 1861 remains valid. uscurrency.gov
4. Board of Governors of the Federal Reserve System. (2025, July 17). How long is the lifespan of U.S. paper money? Estimates as of May 2025. federalreserve.gov
5. U.S. Department of the Treasury. (n.d.). Alexander Hamilton (1789-1795). home.treasury.gov
6. Library of Congress. (n.d.). Benjamin Franklin: In his own words [Exhibition]. loc.gov

A pile on the table

Three quarters, two dimes, one nickel and four pennies are lying on the kitchen table in a jumble. How much money is that?

If you grab coins one at a time and add them up in any order, you will probably lose your place. There is a better way, and it has four steps. Work through them with real coins or play coins if you have them.

Step 1: Sort

Push the coins into piles, one kind of coin per pile.

• Quarters: 3
• Dimes: 2
• Nickels: 1
• Pennies: 4

Sorting does not change how much money there is. It just makes the counting tidy, so you can see what you have.

Step 2: Line up by value, not by size

Now put the piles in a row, starting with the coin worth the most. That means quarters first, then dimes, then nickels, then pennies.

Careful here. The dime is the smallest coin, but it goes second, ahead of the bigger nickel and penny, because it is worth more. You line up by what a coin is worth, not by how big it looks.

Step 3: Count on

Start with the first pile and count on, adding each coin's value to the total so far. Say the numbers out loud.

The pile is worth 104 cents.

Each coin has its own counting pattern. Practice them on their own first.

• Quarters count by 25s: 25, 50, 75, 100.
• Dimes count by 10s: 10, 20, 30, 40, 50.
• Nickels count by 5s: 5, 10, 15, 20, 25.
• Pennies count by 1s: 1, 2, 3, 4, 5.

The quarter pattern is the hardest to remember. Here is a helper: two quarters make 50 cents, which is half a dollar, and four quarters make a whole dollar.

Key idea: Sort, line up the coins worth the most first, then count on out loud. You never have to hold a big number in your head, only the last number you said.

Step 4: Write it down two ways

There are two ways to write 104 cents.

• In cents: 104¢. The cent sign looks like a little c with a line through it.
• In dollars and cents: $1.04. That means 1 dollar and 4 cents.

The dot in $1.04 is called a decimal point. Its job is to split the dollars from the cents. Whole dollars go on the left of the dot. Cents go on the right.

There are always two places for cents after the dot, because a dollar has 100 cents. So four cents is written $1.04, with a zero holding the first place. If you write $1.4, a grown-up will read it as one dollar and forty cents, which is a lot more than you have.

Equal trades

Different coins can add up to the same amount. Five pennies are worth the same as one nickel. Two nickels are worth the same as one dime. Knowing these trades helps you count faster and check your answer.

Here is a puzzle that uses the trades. What is the smallest number of coins that makes 30 cents? Three dimes is three coins. Six nickels is six coins. A quarter and a nickel is only two coins, so that is the answer.

The upshot: The number of coins and the amount of money are different things. Ten pennies is ten coins but only 10 cents. One quarter is one coin and 25 cents.

Bills first, then coins

When a pile has bills in it too, count the bills first, because they are worth the most. Then keep counting on through the coins.

Say you have a five-dollar bill, two one-dollar bills, three quarters and one dime.

1. The five: 5 dollars.
2. The ones: 6 dollars, 7 dollars.
3. The quarters: 7 dollars 25, 7 dollars 50, 7 dollars 75.
4. The dime: 7 dollars 85.

Written down, that is $7.85.

One coin changes the answer

Now use counting to make a decision. Sam has our first pile, $1.04. A juice box costs $1.10. Is it enough?

Compare the two amounts. $1.04 is less than $1.10. Sam is short. How short? Count up from 1.04 to 1.10: that takes 6 more cents. Sam cannot buy the juice box yet.

Now change one coin. Suppose one of Sam's pennies is really a dime he missed. His pile is now three quarters, three dimes, one nickel and three pennies.

1. Quarters: 25, 50, 75.
2. Dimes: 85, 95, 105.
3. Nickel: 110.
4. Pennies: 111, 112, 113.

That is $1.13. Now $1.13 is more than $1.10, so Sam can buy the juice box and have 3 cents left over.

One coin was all it took to flip the answer from no to yes. That is why careful counting matters. It is also why it pays to sort first: a dime hiding among the pennies is easy to miss.

A note for the grown-up helping

In the Common Core math standards, solving money problems with coins, bills and the $ and ¢ signs is a second-grade skill, so a first grader may need to stay with pennies, nickels and dimes for a while before adding quarters. A muffin tin or an egg carton makes a good sorting tray. Let your child say every number out loud; the out-loud count is what shows you where a mistake happens. If you have no coins, play coins or paper circles labeled 1, 5, 10 and 25 work fine.

Common misconceptions

• Mistake: more coins means more money. Nine pennies is nine coins but only 9 cents. One dime is one coin and worth more.
• Mistake: count the biggest coins first means the biggest by size. It means the coins worth the most. The tiny dime comes before the nickel and the penny.
• Mistake: $0.5 means five cents. It means 50 cents. Five cents is written $0.05.
• Mistake: a quarter is 20 cents. Counting by tens through quarters gives the wrong total. A quarter is 25 cents: four of them make 100.

The short version

• To count a pile: sort it, line it up from the coins worth the most, then count on out loud.
• Count bills first, then quarters, dimes, nickels and pennies.
• The decimal point splits dollars from cents, and cents always take two places: $1.04.
• Equal trades, like 5 pennies for a nickel and 2 nickels for a dime, help you count and check.
• The number of coins is not the amount of money.
• To see if you have enough, compare your total with the price. One missed coin can change the answer.

Sources

1. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades Pre-K to 2, parent/caregiver guide: Lesson 1, Counting coins. Showing children that five pennies equal a nickel and two nickels equal a dime, and counting saved coins. fdic.gov
2. National Governors Association Center for Best Practices and Council of Chief State School Officers. (2010). Common Core State Standards for Mathematics, Grade 2, Measurement and Data, 2.MD.C.8. Word problems with dollar bills, quarters, dimes, nickels and pennies, using the $ and ¢ symbols. thecorestandards.org
3. United States Mint. (2026). Coin Classroom: Dollar. It takes 100 pennies to equal a dollar. kids.usmint.gov
4. Federal Deposit Insurance Corporation. (2026). Money Smart for Young People [Curricula for Pre-K to grade 12, including the Pre-K to 2 lesson Counting Coins]. fdic.gov

Forty-five cents back

Ava and her brother Ben are playing store at the kitchen table. A bag of pretzels has a sticky-note price tag: 65¢.

Ava pays with a one-dollar bill. Ben opens the shoebox cash drawer and hands her back four dimes and a nickel. That is 45 cents.

Ava counts it and frowns. Something is wrong. Before reading on, can you tell what?

Here is a quick test. Add the price and the change together. They should make exactly what Ava paid, one dollar. But 65 cents plus 45 cents makes 110 cents. Ben's store just gave away 10 cents too many.

The right change is 35 cents. This lesson finds out exactly where Ben's 45 came from, and then shows the way real cashiers make change so the mistake cannot happen.

Where the 45 came from

Ask Ben how he worked it out, and he says this: "65 is close to 60. One hundred take away 60 is 40. Then I added the 5. So 45."

Follow his steps one at a time.

1. "One hundred take away 60 is 40." That part is right.
2. "Then I added the 5." Here is the slip. The price was 65, not 60. Ben has only taken 60 away so far. The other 5 cents of the price still has to come off too.
3. The fix: 40 take away 5 is 35.

Ben's idea of splitting 65 into 60 and 5 was a good one. He just went the wrong way with the 5. Every piece of the price has to be taken away.

Why this matters: A wrong answer usually comes from one small step, not from being bad at math. Find the step, and the rest of the thinking is often fine.

Counting up, the cashier's way

Many cashiers do not subtract at all. They count up from the price to the money they were given. It is like climbing stairs from the price to the top step, which is the amount paid.

1. Say the price out loud: "65."
2. Add a coin to reach a friendly number. A dime takes you to "75."
3. Add the coin that takes you to the amount paid. A quarter takes you from 75 to "one dollar."
4. Stop. The coins in your hand are the change: a dime and a quarter, which is 35 cents.

There is often more than one way to climb the stairs.

Every row gives 35 cents. The coins are different, but the amount is the same.

Remember: When you make change, start at the price and stop at what was paid. The coins you added are the change.

Check it by adding back

The check Ava used works every single time: price plus change equals the money paid.

• Right answer: 65 plus 35 is 100. One dollar. It checks.
• Ben's answer: 65 plus 45 is 110. That is more than one dollar, so it is wrong.

Good cashiers count the change into your hand out loud, starting from the price, so you can check along with them.

Two more ways change goes wrong

Stopping on the wrong step. A book costs $3.65 and you pay with a five-dollar bill. A hurried cashier counts: "3.65, a dime makes 3.75, a quarter makes 4 dollars," and hands you 35 cents. Stop there and you lose a dollar. You paid 5 dollars, not 4. Keep climbing: one more dollar bill takes you from 4 to 5. The right change is $1.35.

Counting coins instead of cents. A little brother gets a dime and a quarter back and says, "Two cents, because there are two coins." Two coins is not two cents. A dime is 10 and a quarter is 25, so it is 35 cents.

Paying with a bigger bill

Counting up works for bigger amounts too. Say lunch costs $6.80 and you pay with a ten-dollar bill.

1. Start at the price: "6.80."
2. A dime: "6.90." Another dime: "7 dollars."
3. Now whole dollars: "8, 9, 10."
4. Change: two dimes and three one-dollar bills, which is $3.20.

Check by adding back: $6.80 plus $3.20 is $10.00. It checks.

When pennies run short: rounding to five cents

In Lesson 2 you learned that the Mint stopped making pennies for spending in November 2025. Pennies are still money, but as fewer of them reach stores, some stores now round a cash total to the nearest five cents, so they do not need pennies for change.

A report written for state lawmakers, which the U.S. Treasury repeats in its advice to stores, describes one fair way to do it. Look at the last digit of the total.

Three things about this rule matter.

• It goes both ways. The Treasury expects totals to be rounded down just as often as they are rounded up, so nobody gains or loses on purpose.
• It happens at the very end. Stores add up everything, including any tax, and round only the final total.
• It is only for cash. If a grown-up pays with a card or a check, they pay the exact amount, to the cent.

Not every store rounds, and the rules can differ from place to place. A store that has pennies can still give them.

Here is a rounding problem worked all the way through. Pretzels and a juice box come to $1.63 with tax, and you pay with two one-dollar bills in cash. The total ends in 3, so it rounds up to $1.65. Count up: a dime makes 1.75, a quarter makes 2 dollars. Your change is 35 cents, the same number this lesson started with.

A note for the grown-up helping

Playing store is the best practice there is: sticky-note prices, play money, and a shoebox drawer. Let your child be the cashier and count the change into your hand out loud from the price. For younger children, use prices ending in 0 or 5 and only coins; add bills and the rounding rule later. In many places sales tax is added at the register, which is why a real total can be a little higher than the price tags. If your child ever gets too much change in a real store, it is a good moment to hand it back together.

Common misconceptions

• Mistake: you have to be good at subtraction to make change. Counting up from the price needs only adding, one coin at a time.
• Mistake: change is the number of coins you get back. Change is how much those coins are worth. A dime and a quarter is 35 cents, not 2.
• Mistake: rounding means the store always takes more. The rule rounds down as often as it rounds up.
• Mistake: card payments get rounded too. Rounding is only for cash. Cards pay the exact amount.
• Mistake: extra change from a mistake is yours to keep. It is the store's money. Handing it back is the honest thing to do.

Putting it together

• Price plus change always equals the money paid. Use that to check any change.
• Counting up means starting at the price and adding coins until you reach the amount paid.
• Common mistakes are adding a piece of the price instead of taking it away, stopping before you reach the amount paid, and counting coins instead of cents.
• Some stores now round cash totals to the nearest five cents: 1 and 2 go down, 3 and 4 go up to 5, 6 and 7 go down to 5, and 8 and 9 go up.
• Rounding happens at the end, only for cash. Cards and checks pay the exact amount.

Sources

1. U.S. Department of the Treasury. (2025, December 23). Penny production cessation FAQs. Rounding cash transactions to the nearest five cents after taxes, rounding only for cash, rounding down as often as up, and the final-digit rule it quotes from a report for state legislatures. home.treasury.gov
2. United States Mint. (2025, November 12). United States Mint hosts historic ceremonial strike for final production of the circulating one-cent coin [Press release]. usmint.gov
3. National Governors Association Center for Best Practices and Council of Chief State School Officers. (2010). Common Core State Standards for Mathematics, Grade 2, Measurement and Data, 2.MD.C.8. thecorestandards.org
4. Consumer Financial Protection Bureau. (2024). School-age children and shopping. Money as You Grow. Includes the activity What's on a receipt, practicing estimates of the price paid at the register with sales tax. consumerfinance.gov

A bowl of cereal, followed backward

Priya pours cereal into a bowl and adds milk. It is an ordinary Tuesday breakfast. But before she takes a bite, follow that breakfast backward, one step at a time, to see where it came from.

1. A farmer grew the grain the cereal is made from. The farmer sold the grain and was paid for it.
2. A dairy farmer looked after the cows and sold the milk.
3. A factory worker ran the machine that toasted the flakes and packed them into boxes. The factory paid the worker for every hour worked.
4. A truck driver drove the boxes and the milk to the store.
5. A store clerk put the box on the shelf and rang it up at the register.
6. A grown-up in Priya's family paid for the box with money earned at their own job.

Every one of those people did some work, and every one of them got paid. One bowl of cereal holds a lot of jobs.

Earning means getting paid for work

To earn money means to get money in exchange for work. That work comes in two kinds, the same two kinds of things money buys.

• Some people make or grow goods: the farmer's grain, the factory's cereal.
• Some people do services: the truck driver's driving, the clerk's help at the register.

A job is work a person does with their time, skills and energy to earn money. The money a person receives is called their income.

The point: Money does not come from a store or a bank machine. It starts with somebody's work.

Four ways to be paid

People are not all paid in the same way. Here are four ways, with jobs you might know.

Here is how the first two feel different. A clerk paid 15 dollars an hour earns 15 dollars for one hour, 30 for two, and 60 for four. A teacher on a salary is paid the same amount each payday, whether that week has a long day or a short one.

People who start businesses

Some people do not work for somebody else. They start their own business. A person who creates and runs a business is called an entrepreneur.

The farmer who sells grain may be one. So may the owner of the bakery down the street. An entrepreneur is not paid wages or a salary. Instead, the business sells its goods or services, pays for everything it used, and the owner keeps what is left. That leftover money is called profit, and the last two lessons of this course are all about it, at a lemonade stand.

Why a paycheck is smaller than the pay

When a grown-up's job pays them, some of the money goes to the government first. That money is called taxes.

Taxes pay for things a whole town or country shares: schools, roads, libraries, fire fighters and police. No single family could build a road or run a library alone, so everybody chips in.

So if a job pays 100 dollars, the grown-up might take home less than 100. The rest has already gone to pay for things everyone uses, including your school.

Bottom line: Earning starts with work, and part of what grown-ups earn pays for things everybody shares.

Money that is not earned

Not all money comes from a job. Some comes as a gift, like birthday money from a grandparent. Some families give children an allowance, a small amount of money given regularly, sometimes with jobs attached and sometimes not.

Many families do not give an allowance at all. That is completely normal. Families decide this for themselves, for all kinds of good reasons, and you can learn every idea in this course without one.

How a child can earn, safely

Children can sometimes earn small amounts too. Here are ideas families have used. Every one of them starts with a grown-up saying yes.

• An extra job at home that is beyond the everyday chores everyone in the family does, like washing the car.
• A job for a neighbor your family knows well: raking leaves, watering plants, or bringing in the mail while they are away.
• Selling something, like lemonade or old toys at a family yard sale.

A few rules keep earning safe. Only take jobs your grown-up has agreed to. Never take a job from a stranger, and never from someone online. Nobody needs your name, your address or a password to give you a fair job.

If no real money changes hands in your family, that is fine. The activities in this course use play money, so you can earn a pretend paycheck at the kitchen table instead.

Getting better at earning

Different jobs need different things: knowledge, skills, interests and experience. A bus driver needs to know the roads. A baker needs to know recipes. People can often earn more by learning new skills. That is one reason grown-ups go to classes and read books long after school ends.

You are already building skills that jobs use: reading, counting money, being on time, and doing what you said you would do.

A note for the grown-up helping

The lesson deliberately treats allowance as one choice among several. If your family does give one, it helps to talk with your child about plans for the money, which matters more than the amount. If you do not, gifts, a family job chart with play-money pay, or simply the course activities give the same practice. The lesson's safety rules are worth repeating out loud: jobs only with your permission, never from strangers or anyone online, and no personal details for anybody.

Common misconceptions

• Mistake: grown-ups get money from the bank machine whenever they want. The machine only hands out money that is already in the grown-up's account, money that was earned first.
• Mistake: everybody is paid the same way. Some people earn wages by the hour, some a salary, some tips, some a commission, and business owners earn a profit.
• Mistake: a grown-up keeps everything a job pays. Part goes to taxes, which pay for schools, roads and libraries.
• Mistake: only grown-ups can earn. Children can earn small amounts with a grown-up's say-so.
• Mistake: every child gets an allowance. Many do not, and that is normal.

What you now know

• To earn money means to get money for work, by making goods or doing services.
• The money a person receives is their income.
• People are paid in different ways: wages by the hour, a salary for the year, tips from customers, or a commission on sales.
• An entrepreneur starts and runs a business and keeps the profit.
• Taxes come out of pay and pay for things everyone shares, like schools, roads and libraries.
• Money can also come as gifts or an allowance, and many families do not give an allowance.
• Children can earn safely only with a grown-up's say-so, never from strangers or online.

Sources

1. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Earning Income, grade 4, standards 4-1 to 4-7). Different ways to be paid, including wages, salaries, commissions and tips; entrepreneurs; gifts and allowances; taxes for fire protection, police, libraries and schools. councilforeconed.org
2. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades Pre-K to 2, parent/caregiver guide: Lesson 2, Learn to earn. Jobs that provide goods or services, and children earning by helping, caring for a pet, or selling lemonade or used toys. fdic.gov
3. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 8, Career choices. Income, entrepreneurs, and what taxes pay for. fdic.gov
4. Consumer Financial Protection Bureau. (2024). School-age children and earning. Money as You Grow. Talking about what counts as extra work in your family, and why the plan for an allowance matters more than the allowance. consumerfinance.gov

Two cousins and one bike

Jaden and Rosa are sorting picture cards into two piles on the kitchen table. One pile is for needs. The other is for wants.

They agree about most of the cards. Water goes in the needs pile. Candy goes in the wants pile. A winter coat: need. A video game: want.

Then Rosa picks up a card with a bike on it, and they stop.

"Want," says Jaden. "You can live without a bike."

"Need," says Rosa. "My cousin Marco rides his bike to school every day. There is no school bus where he lives."

Who is right? Each of them has a good reason. Here are both reasons, and then the question that settles it.

What the two words mean

Needs are things people must have to live and stay healthy and safe: food, water, clothing, and a place to live.

Wants are things people would like to have but could live without: a new toy, a video game, a candy bar.

For grown-ups, the list of needs is a little longer. It also includes what they need to do their jobs, like a way to get to work, and money saved for surprises, like a broken furnace.

Jaden's side: a bike is a want

Jaden's argument is strong. Look at the list of needs: food, water, clothing, a place to live. A bike is none of those. People lived long, healthy lives for thousands of years before bikes were invented. Most children ride bikes for fun, on weekends, around the block. If Jaden's own bike broke tomorrow, nobody in his family would go hungry or cold.

By the strict meaning of a need, Jaden is right about his own bike.

Rosa's side: for Marco, it works like a need

Rosa's argument is strong too, but it rests on different evidence: what the bike does for one particular person. Marco has no bus and no car to take him. Without the bike, he cannot get to school, and going to school is his job as a kid.

The people who write money lessons for the Consumer Financial Protection Bureau, a government office that helps families with money, give an example just like Marco's. An older teenager might need a car to get to a job after school, they say, while another teenager might only want a car to go places they enjoy. The same thing can be a need for one person and a want for another.

What settles it

Both cousins are partly right, because the answer depends on the situation, not on the bike. Here are three questions that sort almost anything.

1. What job does this thing do for this person?
2. Could they live and stay healthy and safe without it?
3. Is there another way to get that job done?

Try them on Jaden's bike. Its job is fun. He could live without it. That makes it a want. Now Marco's bike. Its job is getting him to school. There is no other way. For Marco, it works like a need.

There is one more twist. Marco needs a bike, a plain one that is safe and gets him there. He does not need the shiny one with twenty gears. Once a plain one does the job, the fancy extras are wants. It is the same with shoes: you may need shoes because your feet have grown, but a pair that costs 100 dollars, when a cheaper pair fits just as well, is a want.

The core of it: Whether something is a need or a want depends on what it does for a person, not on the thing itself.

Wants still matter

A want is not a bad thing. A family might want to go camping together. Nobody needs a camping trip to survive, but spending time together outdoors might matter a lot to that family. A birthday present is a want. So is a book you are excited about.

The point of telling needs from wants is not to give up every want. It is to make sure the needs are covered first, and then to choose your wants on purpose instead of by accident.

Why you cannot have everything

Here is the problem every family, every business and every country has. Wants never run out. As soon as you get one thing, there is another thing you would like. But money runs out. So does time.

When there is not enough of something for everyone to have everything they want, economists call that scarcity. Because of scarcity, people must make choices.

The thing you give up

Every choice has a hidden price. Here is how to find it.

Lily has 5 dollars. There are two things she would really like: a kite that costs 5 dollars, and a book that costs 5 dollars. The book is her second favorite. She chooses the kite.

What did the kite cost her? It cost 5 dollars, yes. But it also cost her the book, because now she cannot buy it. The next best thing you give up when you make a choice is called the opportunity cost. Lily's opportunity cost is the book.

Notice what the opportunity cost is not. It is not every toy in the store. Lily was never going to buy all of those. It is only the one thing she would have picked next.

Look at the middle row. Opportunity cost is not only about money. Time is scarce too, and every hour spent one way is an hour not spent another way.

So what?: Before you spend, ask what you are giving up. If the thing you are buying matters more to you than the thing you give up, it is a good choice for you.

A note for the grown-up helping

Needs and wants can be a tender subject when money is tight. Keep the talk about choosing rather than judging, and let your child hear that your family sometimes decides a want is worth it. The sorting activity is meant to produce disagreements like Jaden and Rosa's; the Consumer Financial Protection Bureau's own teaching guide notes that children's answers may vary and that there may not be only one right answer. The useful part is the reason a child gives.

Common misconceptions

• Mistake: if I want something really, really badly, it is a need. How strongly you feel does not change it. Ask whether you could live and stay healthy and safe without it.
• Mistake: wants are a waste of money. Wants can matter a great deal. The trick is covering needs first and choosing wants on purpose.
• Mistake: expensive things are needs. A need can be cheap, like water, and a want can be expensive, like the fanciest shoes.
• Mistake: the opportunity cost is the price. The price is the money. The opportunity cost is the next best thing you could have had instead.
• Mistake: everyone has the same needs. A bike can be a need for Marco and a want for Jaden.

Summing up

• Needs are things people must have to live and stay healthy and safe. Wants are things they would like but could live without.
• The same thing can be a need for one person and a want for another, so ask what job it does for that person.
• Even when you need something, the fanciest kind of it can be a want.
• Wants still matter. Cover needs first, then choose wants on purpose.
• Scarcity means wants never run out, but money and time do, so everyone has to choose.
• Opportunity cost is the next best thing you give up when you choose.

Sources

1. Consumer Financial Protection Bureau. (2022). Building blocks teacher guide: Exploring needs and wants [Elementary activity]. Needs and wants defined; something that is a need for one person can be a want for another; a want can still be important; answers may vary. consumerfinance.gov
2. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 1, Money matters. One person's need as another's want, the 100-dollar shoes, and opportunity cost with a notebook and stickers. fdic.gov
3. Federal Reserve Education. (n.d.). Scarcity and opportunity cost [Video assignment, grades K-5]. Unlimited wants and limited resources; the next best thing given up. federalreserveeducation.org
4. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Spending, grade 4, standards 4-1 and 4-3). People differ in preferences, priorities and resources; every use of money carries an opportunity cost. councilforeconed.org

Two boxes on one shelf

Two boxes of the same cereal sit side by side on a store shelf. The small box holds 12 ounces and costs $3.00. The big box holds 20 ounces and costs $4.00.

The big box costs more money. So is the small box the better deal?

Not so fast. The big box also holds more cereal. To compare them fairly, you need to know how much each ounce costs. This lesson walks through the steps on these two boxes, then changes one price and shows how the answer flips.

Step 1: Make sure it is the same thing

Comparing only works when the two things really are the same, or when you have decided the differences do not matter to you. Same cereal, same flavor? Good. If one box is a different kind, you are comparing two different things, and taste matters as much as price.

Step 2: Find the amount on each package

Every package tells you how much is inside. Look for a number with a unit after it: ounces, pounds, or a count, like 10 pencils or 24 juice boxes. On our boxes, that is 12 ounces and 20 ounces.

Do not judge by the size of the box. Boxes can have air in them, and two boxes that look the same size can hold different amounts.

Step 3: Work out the unit price

The unit price is how much one unit costs: one ounce, one pencil, one juice box. To find it, divide the price by the amount. It helps to turn dollars into cents first.

Each ounce in the big box costs 20 cents. Each ounce in the small box costs 25 cents. The big box is the better deal, even though it costs more money in all.

Key idea: To compare two sizes, compare the unit prices, not the prices on the front.

A shortcut with no dividing

If dividing is still new to you, try doubling. A 10-ounce bag of rice costs $2.00. A 20-ounce bag costs $3.50. The big bag holds exactly twice as much. Two small bags would cost $2.00 plus $2.00, which is $4.00. The big bag costs only $3.50 for the same amount of rice, so it is cheaper per ounce.

Step 4: Check the shelf tag

Here is good news. You often do not have to do the math at all. Many stores print the unit price on the shelf tag, right under or above the item, often in a small box with the words unit price or per ounce. The National Institute of Standards and Technology, the government's measuring experts, calls unit pricing the best tool a shopper has.

Some states require stores to show unit prices. In other places, a store may choose to. If there is no tag, you can still work it out yourself.

Now change one price

Back to the cereal. Next week the big box goes up to $6.00, and the small box stays at $3.00.

Now each ounce in the big box costs 30 cents, and the small box is the better deal. Same boxes, same cereal, one changed price, and the answer flipped. That is why you check every time instead of remembering that big is cheaper.

The upshot: Bigger is often cheaper per ounce, but not always. Only the unit price tells you.

The same thing at two stores

Sometimes there is no math at all. A pack of 10 pencils costs $2.50 at one store and $2.00 at another. Same pack, same pencils, so the cheaper store saves you 50 cents. Grown-ups call this shopping around: looking at more than one store, or more than one website, before buying.

Coupons and sales lower a price too. A coupon or a sale only saves you money if you were going to buy that thing anyway.

Same price, less inside

Here is a sneaky one. Sometimes a company keeps the price the same but puts less inside the package. A few years ago a carton of ice cream usually held 1.5 quarts. Many cartons now hold 1.44 quarts and look almost the same. People call this shrinkflation.

The fix is the same as before. Read the amount on the package, and check the unit price. A box that looks the same might hold less.

Cheapest is not always best

Price is not the only thing to compare. A $2.00 umbrella that breaks in the first storm can cost more in the end than a $6.00 umbrella that lasts for years, because you have to keep buying new ones. Comparing what things do, how well they are made and how long they last, along with the price, is called comparing features.

Where can you find out how well something works? Read the package, ask a grown-up who has used one, or look at reviews with a grown-up. Be careful with ads, which are written to make you want things. That is a whole lesson later in the course.

A deal you will not use is not a deal

A giant bag of 20 apples costs less per apple than a bag of 6. But if your family only eats 6 apples before the rest go soft, the extra 14 get thrown away. The bag of 6 was the better buy for your family. The same goes for "buy two, get one free" when you only wanted one.

A note for the grown-up helping

The easiest practice is a real shelf tag. On your next grocery trip, point out the unit price on two sizes of the same item and let your child decide which is the better deal; no purchase is needed. At home, the labels on things already in the pantry work just as well. Children who cannot divide yet can use the doubling shortcut, or simply compare two items of the same size and amount. The shrinkflation example is from the National Institute of Standards and Technology.

Common misconceptions

• Mistake: the bigger box is always the better deal. Often it is, but a price change can flip it. Check the unit price.
• Mistake: a bigger box holds more. Boxes can hold air. Read the amount, not the size of the box.
• Mistake: the cheapest price is always the best value. Something cheap that breaks quickly can cost more in the end.
• Mistake: a sale always saves money. It only saves money on something you were going to buy and will use.
• Mistake: the same package always holds the same amount. Companies sometimes put less inside for the same price.

What to carry forward

• To compare the same thing at two stores, just compare the prices.
• To compare two sizes, find the unit price: the price divided by the amount.
• Many shelf tags show the unit price already.
• One price change can flip which size is the better deal, so check each time.
• Read the amount on the package, because some packages shrink while the price stays the same.
• Compare features and how long things last, not only price, and do not buy more than you will use.

Sources

1. McGuire, J. T., Sefcik, D. A., Dolan, S., Baucom, I. C., and Lippa, K. A. (2025). Unit pricing guide: A best practice approach to unit pricing (NIST Special Publication 1181-2025). National Institute of Standards and Technology. Unit pricing as the cost per unit of measure, shown on shelf labels. nist.gov
2. National Institute of Standards and Technology. (2025, September 15). Uniform unit pricing: Tools for consumers to fight shrinkflation. Unit pricing as the best tool a consumer has; shrinkflation and the ice cream carton example. nist.gov
3. Consumer Financial Protection Bureau. (2024). School-age children and shopping. Money as You Grow. Shopping around and comparing prices before you buy, and using coupons. consumerfinance.gov
4. Consumer Financial Protection Bureau. (2026). School-age children to preteens. Money as You Grow. Try shopping around and comparing prices and features before you buy. consumerfinance.gov
5. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 1, Money matters. Comparing choices to find which item has the best value. fdic.gov

A kite in a shop window

Ava walks past a shop and sees a red kite in the window. It has a long tail made of ribbons. The tag says $12.

Ava has no money with her. But her family has agreed she can earn $2 a week for an extra job, feeding the neighbor's cat while the neighbor works late. She wants that kite.

Here is the question for this lesson: if Ava puts $2 into a jar every week, how many weeks until she can buy the kite?

Have a guess before you read on.

Working it out

One way is to count by twos, one count for each week, until you reach 12.

2, 4, 6, 8, 10, 12.

That is six counts, so it takes six weeks.

Another way is to divide. The kite costs 12 dollars, and Ava saves 2 dollars a week. 12 divided by 2 is 6. Six weeks again.

Ava now has a savings goal: something she plans to save up for, with a price she knows. She also has a savings plan: $2 a week for six weeks.

The goal chart

A goal chart shows the plan, week by week. It also shows how much is still to go.

Look at the last two columns. Every week, the total goes up by 2 and the amount still needed goes down by 2. They always add up to 12, the price of the kite.

The jar with a line on it

Ava makes a goal jar. Here is how.

1. Find a clear jar, so you can see the money inside.
2. Draw a picture of the kite, write $12 on it, and tape it to the jar.
3. Next to the jar, put a chart with 12 boxes, one for each dollar.
4. Each time money goes in, color in one box for each dollar.

The picture matters more than you might think. Seeing what you are saving for, every day, helps you keep going on the days you would rather spend.

Remember: A savings goal has three parts: what you want, what it costs, and how much you can put away each week.

What saving really means

When Ava puts $2 in the jar, she is choosing not to spend it today, so that she can buy something better later. That is what saving means.

Saving has an opportunity cost too. Each week Ava could have spent her $2 on a snack or a sticker book. She gives those up to get the kite. Spending has an opportunity cost as well: a snack today costs her a week of kite money.

Change one number

What if Ava could save more each week, or less? Change the weekly amount and the whole plan changes.

Saving more each week means fewer weeks of waiting. Saving less means more weeks. Either way the goal is still reachable. It just moves closer or farther away.

When money comes out of the jar

In week 3, Ava has $6 in the jar. Her friends are buying snacks, and she takes out $2 to join them.

Her jar drops back to $4, which is where it was at the end of week 2. So she is now one whole week behind. Instead of buying the kite in week 6, she will buy it in week 7.

That is the rule: every dollar taken out of a goal jar pushes the goal further away. Ava decided the snack was worth one extra week. That can be a fine choice, as long as she makes it knowing the cost.

Short goals and long goals

A goal you can reach soon, this week or in a few weeks or months, is a short-term goal. The kite is one. A goal that will take a year or longer, like a new bike or a trip, is a long-term goal. Some long-term goals belong to grown-ups, like paying for college.

Long goals are easier if you break them into steps. Saving $60 can feel impossible. Saving $5 for each of twelve months feels possible, and each month is a small win.

Picking a goal you can reach

A good goal stretches you a little but is still realistic. Suppose Ava wanted a $500 bike, and could only save $1 a week. That would take 500 weeks, which is almost ten years. She would be a teenager before she rode it. A goal that far away is easy to give up on. She might pick a smaller goal first, or find out whether a good used bike costs less.

Saving when money does not come every week

Ava earns $2 a week, but plenty of children do not get money every week, and many get none at all. Saving still works.

• Birthday or holiday money can start a goal jar.
• Coins you find, with a grown-up's say-so, can go in.
• Play money from the activities in this course works for practice.
• A goal chart works without any money. Use stars or stickers for helping out, and work toward something like a trip to the park or choosing a family movie.

Some families like to add a little to a child's savings as a reward, like 25 cents for every dollar saved. That is a family choice, not a rule.

In short: Pick a goal, find its price, decide how much you can save each week, work out the weeks, and fill in a chart until you get there.

A note for the grown-up helping

The goal does not have to be expensive or even real; a pretend goal with play money teaches the same arithmetic and the same waiting. What helps most is talking about the plan, checking the chart together each week, and asking whether the goal still matters. If your child takes money out of the jar, treat it as a lesson about trade-offs rather than a failure. Saving at least a dime of every dollar is a common rule of thumb if your family wants one.

Common misconceptions

• Mistake: saving means never spending. Saving means spending later, on something you chose on purpose.
• Mistake: a little each week does not add up. $2 a week is $12 in six weeks and $104 in a year.
• Mistake: taking out a little does not matter. Every dollar out pushes the goal further away.
• Mistake: if I wait longer, the kite will get cheaper. Waiting does not lower the price. Saving more each week is what makes the wait shorter.
• Mistake: you need a lot of money to start saving. You can start with a single coin, or with play money for practice.

Recap

• A savings goal is something you plan to save for, with a price you know.
• Weeks needed is the price divided by what you save each week: $12 at $2 a week is 6 weeks.
• A goal chart shows the total so far and how much is still needed. Together they always make the price.
• Saving more each week shortens the wait. Taking money out lengthens it.
• Short-term goals come soon. Long-term goals take a year or more and are easier in steps.
• You can practice saving with gifts, found coins, play money, or stars on a chart.

Sources

1. Federal Reserve Banks of St. Louis, Philadelphia, and Kansas City. (2012). Bunny Money [Lesson plan, grades K-1]. Saving as keeping money to spend in the future; a savings goal as something you want to buy later; short-term and long-term goals. federalreserveeducation.org
2. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 2, Get set for goals. Short-term and long-term goals and savings goals. fdic.gov
3. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades Pre-K to 2, parent/caregiver guide: Lesson 4, Ready. Set. Goal. Realistic goals and a goal chart using stickers or tokens. fdic.gov
4. Consumer Financial Protection Bureau. (2024). School-age children and saving. Money as You Grow. Saving at least a dime for every dollar, setting a goal and breaking it into steps, and a family matching plan. consumerfinance.gov
5. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Saving, grade 4, standards 4-1 and 4-2). Saving as choosing not to spend today; a savings plan for a future goal. councilforeconed.org

Four weeks, one dollar

Leo earns $5 a week walking a neighbor's dog, a job his family agreed to. He wants a skateboard that costs $20. He has a plan, and it sounds sensible.

"I will spend what I need during the week," he says, "and save whatever is left over at the end."

Here is how his first four weeks went.

After four weeks, Leo has earned $20, exactly the price of the skateboard. He has saved $1. At this rate the skateboard would take 80 weeks, more than a year and a half.

Leo did not do anything wild. Nothing he bought was expensive. So where did the plan break?

Tracing where the plan broke

Go back through the plan one piece at a time, the way you would check a math problem.

1. Saving came last. Every want got its turn first. Saving only got what was left after all of them, and that was almost always nothing.
2. Small spends were invisible. No single thing cost much, $1 here, $2 there. Add up the spending column and it comes to $19 of his $20.
3. There was no number. "Whatever is left" is not an amount. With no amount, Leo could not tell in week 2 that he was already behind.
4. The goal was far away, and the treats were close. The skateboard was weeks off. The snack was right there.

Notice that Leo's plan was not wrong because he is careless. It was wrong because of the order he did things in. Almost everyone who tries save-what-is-left finds the same thing.

Why this matters: A plan that saves what is left over usually saves nothing, because there is almost never anything left over.

The fix: pay yourself first

The fix is to flip the order. As soon as money comes in, put the savings away first. Then spend from what remains. People call this pay yourself first.

Same Leo, same $5 a week. The moment he is paid, $2 goes into his skateboard jar. He has $3 left to spend.

After four weeks he has $8 instead of $1. The skateboard comes in ten weeks instead of eighty. He still had $3 a week for snacks and comics. He just had to choose among them.

Three jars: spend, save and share

Many families use three jars to make pay yourself first easy to see.

There is no single right split. Your family decides. A common rule of thumb is to save at least a dime of every dollar. The share jar is a choice, never a rule. When money comes in, fill the jars before you spend anything.

Why saving is hard

If you have ever found saving hard, you are in good company. Here is why it feels that way.

• The thing you could buy now is right in front of you. The goal is weeks away.
• Friends are buying snacks, and it feels odd to say no.
• Ads are made to get people to buy things right away instead of saving.

Tricks that help:

• Keep the save jar somewhere out of the way, not in your pocket.
• Tape a picture of your goal to the jar.
• Wait a day before buying anything you did not plan. If you still want it tomorrow, you can decide then.
• Before a shopping trip, make a list and stick to it.

Money for surprises

Some things you cannot plan for. A library book gets lost, and the library asks you to pay for it. A bike tire goes flat. Money set aside for surprises like these is called an emergency fund.

Imagine Leo has a flat tire to fix in week 6. If he has a few dollars saved for surprises, the tire gets fixed and his skateboard money stays safe. If he has nothing saved for surprises, the tire money comes out of the skateboard jar and his goal moves further away.

Where to keep your savings

A jar at home and an account at a bank each have good points.

A home jar is a great place to start. As savings grow, many families move some into a bank account, which only a grown-up can open. The next lesson follows money into a bank to see exactly what happens to it there.

Worth holding on to: Save first, keep it somewhere safe, and keep a little for surprises.

A note for the grown-up helping

Three jars, or three envelopes, work with any money source: earnings, gifts, or the play money from this course. Let your child choose the goal and help choose the split; what matters is that saving happens first, before spending. If your family keeps savings at home, that is fine; the lesson only compares the two. The idea that it is harder to save than to spend, and that children should look for ads designed to make people spend right away, comes from the national personal finance standards for the end of fourth grade.

Common misconceptions

• Mistake: I will save whatever is left over. There is almost never anything left. Save first.
• Mistake: small spends do not count. Leo's $1 and $2 purchases added up to $19.
• Mistake: once money is saved, it should never be spent. Savings are for goals and surprises. Spending them on the goal is the whole point.
• Mistake: money at home is safe from everything. It can get lost, and it does not earn interest.
• Mistake: everyone has to fill a share jar. Giving is a family choice, and it can be time or things instead of money.

The takeaway

• Saving what is left over usually saves nothing, because spending gets every turn first.
• Pay yourself first: put savings away as soon as money comes in, then spend the rest.
• Spend, save and share jars make the plan easy to see. Your family chooses the split.
• Saving is hard because the treat is close and the goal is far. A picture, a list and a one-day wait all help.
• An emergency fund is money kept for surprises, so a surprise does not wreck your goal.
• A jar at home is easy to use. A bank keeps money safer and pays a little interest.

Sources

1. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 3, Make a plan. A budget as a spending plan, spending limits, and pay yourself first. fdic.gov
2. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 4, Save your money. Emergency funds, and money in a bank being safe and earning interest while money at home does not. fdic.gov
3. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Saving, grade 4, standards 4-1 to 4-4; Managing Risk, standard 4-3). Why it is harder to save than to spend, ads that push spending now, money set aside for emergencies, and safety and ease of access in choosing where to keep savings. councilforeconed.org
4. Consumer Financial Protection Bureau. (2024). School-age children and saving. Money as You Grow. Saving at least a dime for every dollar. consumerfinance.gov
5. Consumer Financial Protection Bureau. (2024). School-age children and planning. Money as You Grow. Making a list before a shopping trip and talking about how easy or hard it is to stick to. consumerfinance.gov

Ten dollars on the counter

Mia got a ten-dollar bill for her birthday from her aunt. Her dad opened a savings account for her at a bank last year. On Saturday morning, the two of them go to the bank together.

Mia slides the ten-dollar bill across the counter to the teller, the bank worker who takes in and hands out money. The teller counts it, types for a moment, and hands back a small slip of paper, a receipt. It shows that Mia's account now holds ten dollars more.

Then the teller drops Mia's bill into a drawer full of other bills.

Where does it go from there? Does it sit in a box with Mia's name on it until she comes back? This lesson follows Mia's ten dollars to find out.

Four bank words

Not in a box with her name

Mia's ten-dollar bill does not wait for her. It joins the bank's cash, all mixed together with everyone else's money.

What the bank keeps for Mia is not the bill. It is a careful record: ten dollars of the money in this bank belongs to Mia. When she comes back for her money, she will get the right amount, but probably in different bills. That is fine. One ten-dollar bill is worth exactly as much as any other.

The bakery's new oven

Down the street, Mr. Lopez runs a bakery. His oven is old and keeps breaking. A new oven costs more money than he has right now.

So Mr. Lopez asks the bank for a loan: money he borrows now and promises to pay back later. The bank says yes. Where does the bank get the money it lends him? From deposits, like Mia's.

Every month, Mr. Lopez pays back part of the loan. He also pays a little extra each time. That extra is called interest. For a borrower, interest is the price of using somebody else's money.

Mr. Lopez is glad to pay it. With the new oven he can bake more bread, sell more, and pay the loan off.

Key idea: A bank is a go-between. It keeps savers' money safe and lends some of it to borrowers.

Mia's share

Here is the part Mia likes. When she keeps money in a savings account, she is really lending it to the bank. The bank lends it on to people like Mr. Lopez. They pay it back with interest. The bank then gives Mia a small part of what it earns.

Put simply: the bank pays you a little for letting it use your money. That little bit is interest too. For a saver, interest is money you earn.

Why would a bank pay Mia at all? For two reasons. It uses her deposit to make loans that earn money. And paying interest is how banks get people to keep their savings there, instead of at another bank or in a jar at home.

The bank charges borrowers like Mr. Lopez more interest than it pays savers like Mia. The difference is how the bank earns money to pay its tellers, light its building and keep things safe.

The core of it: Savers are paid a little interest for lending their money to the bank. Borrowers pay more interest for using it. The bank keeps the difference.

Taking money out

A month later, Mia wants $3 for a book. She and her dad go back to the bank and make a withdrawal. The teller hands Mia three one-dollar bills. Her balance goes down by $3.

Notice that the bank did not need Mia's original ten-dollar bill to pay her. It keeps cash ready for people who want to take money out, and it keeps track of what each person is owed.

What if something went wrong at the bank?

Banks are businesses, and once in a while a business fails, which means it closes because it has run out of money. What would happen to Mia's savings then?

This is where the FDIC comes in. FDIC stands for the Federal Deposit Insurance Corporation. It is a part of the U.S. government set up by Congress to protect people's bank deposits.

• If an FDIC-insured bank fails, the FDIC makes sure people get their deposits back.
• It covers up to $250,000 for each person at each insured bank, for each kind of account. That is far more than most children will ever keep in a bank.
• Nobody has to sign up. The protection comes automatically with savings and checking accounts at an insured bank.
• Since the FDIC began in 1933, no one has lost a single penny of FDIC-insured money.

Some other things a bank may sell, like investments, are not deposits, and the FDIC does not cover them. Grown-ups can check before choosing.

Some families use a credit union instead of a bank. A credit union works a lot like a bank, and the people who keep money there are called members. Money at a federally insured credit union has the same kind of protection, up to $250,000, from a different government agency called the NCUA.

Accounts are for grown-ups to open

A child cannot walk in and open a bank account alone. A parent or another trusted grown-up does that, and looks after the account numbers and passwords. Those stay private. Never share a bank account number, a password or a grown-up's card number with anyone, especially online. This course does not ask anybody to open an account; a jar and a pretend bank teach the same ideas.

A note for the grown-up helping

Children often imagine the bank as a giant piggy bank with their own coins inside. The Mia story is meant to replace that picture with a truer one: a record of what is owed, deposits lent on to borrowers, interest flowing both ways, and government deposit insurance standing behind it. If your family does not use a bank, the activity's pretend bank works just as well. The FDIC's standard coverage is $250,000 per depositor, per insured bank, for each account ownership category; the details of ownership categories matter for larger balances and are explained on the FDIC's website.

Common misconceptions

• Mistake: the bank keeps your exact bill in a box with your name on it. Your money is mixed with everyone's. The bank keeps a record of how much is yours.
• Mistake: a bank just stores money and does nothing with it. It lends deposits to borrowers, which is how it can pay interest.
• Mistake: if a bank closes, everyone loses their money. Deposits at an FDIC-insured bank are protected up to $250,000 per person, and no one has lost insured money since 1933.
• Mistake: interest is always money the bank takes from you. Savers earn interest. Borrowers pay it.
• Mistake: a loan is free money. A loan has to be paid back, with interest on top.

Pulling it together

• A deposit puts money into an account, a withdrawal takes it out, and the balance is how much is there now.
• The bank mixes everyone's money together and keeps a record of how much belongs to each person.
• The bank lends some of its deposits to borrowers, who pay them back with interest.
• The bank pays savers a little interest for letting it use their money, and charges borrowers more. The difference pays the bank's costs.
• The FDIC protects deposits at insured banks, up to $250,000 per person at each bank, and no one has lost insured money since 1933.
• Credit unions have the same kind of protection from the NCUA.
• Only a grown-up can open an account, and account numbers and passwords stay private.

Sources

1. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 4, Save your money. Banks keep money safe and pay interest by using deposits to make loans; a savings account is a loan to the bank. fdic.gov
2. Federal Deposit Insurance Corporation. (2026). Understanding deposit insurance. $250,000 per depositor, per insured bank, for each account ownership category; no depositor has lost a penny of insured funds since 1933. fdic.gov
3. Federal Deposit Insurance Corporation. (2026). Deposit insurance. Automatic coverage for deposit accounts at insured banks, and products that are not deposits and are not insured. fdic.gov
4. National Credit Union Administration. (2026). Share Insurance Fund overview. Insurance of members' deposits at federally insured credit unions up to $250,000, backed by the full faith and credit of the United States. ncua.gov
5. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Saving 4-4 and 4-5; Managing Credit 4-1). Banks pay interest to attract deposits; interest is the price a borrower pays and the income a lender earns. councilforeconed.org

Thirty-seven cents

In September 2026, the average savings account in the United States paid 0.37 percent a year. Here is what that means. Put $100 into an average savings account, leave it there for a whole year, and the bank adds about 37 cents.

Thirty-seven cents for a whole year is not much. This lesson shows how that number is worked out, how interest grows faster the longer you leave it alone, and why people put savings in a bank anyway.

What percent means

Percent means out of 100. One percent of something is one part out of every hundred parts.

One percent of 100 dollars is 1 dollar. Ten percent of a dollar is 10 cents, because a dollar is 100 cents and ten out of every hundred is 10.

A bank's interest rate is given as a percent for one year. It tells you how much interest your money earns in a year. The bigger the percent, the more interest.

A pretend bank with easy numbers

Real savings interest is so small that it is hard to watch it grow. So for practice, picture a pretend bank at your kitchen table that pays 10 percent a year. That is 10 cents a year for every dollar you keep there.

No real savings account pays anything like that. The pretend bank just makes the numbers big enough to see.

Year one

You deposit $10 at the pretend bank. At the end of one year, the bank pays 10 cents for each of your 10 dollars.

10 times 10 cents is 100 cents, which is $1.00. Your account now holds $11.00.

You did not do any work for that dollar. The bank paid you for letting it use your money for a year.

The point: Interest is the bank paying you a little for letting it use your money. More money in the bank, or more time, means more interest.

Year two: interest on interest

Now leave everything in the pretend bank for a second year. The bank pays 10 cents for every dollar in your account, and your account now has 11 dollars in it, not 10.

11 times 10 cents is $1.10. Your account grows to $12.10.

Look at that extra 10 cents. In year one you earned $1.00. In year two you earned $1.10. The extra 10 cents is interest earned on last year's interest. Earning interest on your savings and also on the interest you already earned is called compound interest.

Every year the interest is a little bigger than the year before, because there is a little more money earning it.

Change one choice: Sam and Tia

Sam and Tia each deposit $10 at the pretend bank. Sam leaves everything alone. Tia takes her interest out every year and spends it.

After three years, Sam has $13.31. Tia has $10.00 in the bank and has spent $3.00, so she has had $13.00 in all. Sam is 31 cents ahead. That 31 cents is interest on interest, which Tia never got because her interest was not there to earn any.

Thirty-one cents is not much. But the gap keeps widening. After ten years at the pretend bank, Sam's $10 would have grown to about $25.94, while Tia would have had $20.00 in all: $10 in the bank and $10 spent.

What matters here: Interest grows faster when you leave it alone, because the interest starts earning interest too.

Three things that make interest bigger

Comparing two banks

Banks do not all pay the same rate. Bank A pays 2 percent a year. Bank B pays 1 percent a year. Put $100 in each for a year: Bank A adds $2 and Bank B adds $1. Bank A pays twice as much interest on the same money.

Grown-ups comparing banks look at the rate, and they also check that the bank is insured by the FDIC, so the money is protected.

Back to real life

Now back to real numbers. Real savings interest is small. At the September 2026 average of 0.37 percent, $100 earns about 37 cents in a year, and $10 earns about 4 cents. Some accounts pay more, especially ones where you promise to leave the money for a set time, like a year. Rates also go up and down over time.

So why do people keep savings in a bank? Mostly for safety. The money is protected, it is hard to lose, and it earns a little on top. For a child's savings, the money you put in matters far more than the interest. A $2 deposit every week will grow your savings much faster than any interest rate will.

A note for the grown-up helping

The 10 percent pretend bank is a deliberate exaggeration so that interest can be seen; please say so out loud, so your child does not expect real money to grow that fast. The average rates quoted are the FDIC's national averages published in September 2026, and individual banks and credit unions pay more or less than the average. Comparing two real rates on a bank's website or a sign in a window is a good extension for older children, with no account needed.

Common misconceptions

• Mistake: interest makes your money double quickly. Real savings interest is small: on average, about 37 cents a year on $100 in 2026.
• Mistake: interest is paid only once. It keeps coming for as long as the money stays in the account.
• Mistake: taking the interest out makes no difference. Interest you take out cannot earn interest of its own.
• Mistake: a smaller percent is better, like a smaller price. For savers, a higher interest rate means more money for you.
• Mistake: interest is something the bank takes from savers. For a saver, interest is paid to you.

What to remember

• Percent means out of 100. An interest rate tells you how much your money earns in a year.
• At 10 percent, $10 earns $1 in a year. At a real 0.37 percent, $100 earns about 37 cents.
• Compound interest is interest earned on your savings and on the interest you already earned.
• Leaving interest in the account makes savings grow faster than taking it out.
• More money, more time, or a higher rate all mean more interest.
• People keep savings in a bank mostly for safety, with a little interest on top. For children, what you add matters more than the interest.

Sources

1. Federal Deposit Insurance Corporation. (2026, September 21). National rates and rate caps. National average rate on savings deposits of 0.37 percent and on 12-month CDs of 1.73 percent. fdic.gov
2. Consumer Financial Protection Bureau. (2025). Financial terms glossary. Compound interest, interest rate and savings account. consumerfinance.gov
3. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 4, Save your money. Interest as money a bank pays you for keeping money on deposit, and checking a balance to see interest earned. fdic.gov
4. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Saving, grade 4, standard 4-5). Why banks pay interest, and comparing the interest rates on savings accounts at two institutions. councilforeconed.org

A sleeping bag and two opinions

Ruby is nine. Her class camping trip is in three weeks, and she needs a sleeping bag. The one she likes costs $40. She has $25 saved.

At Sunday dinner she asks for advice, and two grown-ups she trusts give her opposite answers.

"Never borrow," says her grandpa. "If you cannot pay for it now, wait until you can."

"Borrowing can help," says her aunt, "if you are careful. I could lend you the $15, and you could pay me back."

Both of them have good reasons. Here is the evidence for each side, and then the questions that settle it.

What borrowing means

To borrow is to use something that belongs to someone else, with their permission, and give it back. To lend is to let someone else use something of yours. When you take a book home from the library, you are borrowing it.

When people borrow money, it is called a loan. Money you owe is called debt.

Borrowing money usually costs money. The extra you pay is interest, the price of using someone else's money. For the lender, that same interest is what they earn.

Here it is in tiny numbers. A pretend lender lends you $10 and charges $1 of interest. You pay back $11. The $10 was the loan, and the $1 was the price of borrowing it.

Grandpa's side: borrowing costs, so wait

Grandpa's case rests on the price.

• Interest makes everything cost more. A credit card is a way to borrow: the card pays the store now, and the person pays the bank back later. In 2026, the average interest rate on credit cards at U.S. banks was about 21 percent a year. Leave $100 unpaid on a card like that for a whole year, and more than $120 will be owed.
• Saving and borrowing are not even close. In the last lesson, $100 in an average savings account earned about 37 cents in a year. The same $100 borrowed on an average credit card costs more than $20 a year. On these averages, a dollar borrowed on a card costs more than fifty times what a dollar in savings earns.
• A loan is a promise about the future. If the money you planned to pay back with does not come, the debt is still there, and the interest keeps adding up.
• Many things are gone before the loan is. Borrow for candy and the candy is eaten long before the money is paid back.

Bottom line: Borrowing is never free money. Whatever you borrow, you pay back, usually with more on top.

The aunt's side: borrowing can help

Her aunt's case rests on what borrowing makes possible.

• You get to use something now. When you pay with a loan, you have the thing straight away and pay for it over time.
• Some things are too big to save for first. People often borrow for big things that last many years, like a home or a car, and pay the loan back a little at a time.
• Some loans help you earn more. Remember Mr. Lopez and his bakery oven. He borrowed to buy it, and the oven helped him bake and sell enough bread to pay the loan back.
• A card can be used carefully. If a grown-up pays the whole credit card bill every month, they usually pay no interest at all. The cost comes when the bill is not paid in full.

What settles it

Grandpa is right that borrowing costs. The aunt is right that it can help. Which one wins depends on the loan. Three questions decide it.

1. What will it cost? How much interest, or other charges?
2. Can I pay it back on time, for sure? Is there a real plan, with real money coming in?
3. Is having it now worth more than the extra cost? Or could I save and wait?

Now try them on Ruby. She can save $5 a week. Camp is in three weeks. Count it up: $25 now, $30 after one week, $35 after two, $40 after three. She can have the whole $40 just in time, without borrowing anything. For Ruby, waiting wins.

Change one thing. Suppose camp were tomorrow. Then waiting would not work. A small loan from her aunt, with no interest and a clear plan to pay $5 a week for three weeks, could make sense, as long as Ruby keeps her promise.

So what?: Before anyone borrows, they should know the cost, have a plan to pay it back, and ask whether saving first would work. For most things children want, it does.

Why lenders care whether you pay back

Imagine a classmate borrowed your pencil last week and never gave it back. Today she asks to borrow a dollar. Would you lend it?

Banks think the same way. They are more willing to lend to people who have paid back loans as they promised, and who do not already owe a lot of other money. Paying back on time is how people earn the trust of a lender, at school and at the bank.

Debit cards and credit cards

Grown-ups often pay with a card, and the two kinds look almost the same. They work very differently.

A card of either kind is not an endless supply of money. Debit money runs out when the account is empty, and credit card money has to be paid back.

Borrowing things, not just money

Most of what children borrow is not money: a library book, a friend's scooter, a cousin's jacket. The same rules apply. Take good care of it, give it back when you said you would, and say thank you. If you break something you borrowed, tell the owner and help make it right.

The IOU

If you ever borrow money from someone in your family, write an IOU. The letters sound like "I owe you." It is a short written promise.

• Who is borrowing, and who is lending.
• How much.
• When it will be paid back, and how: for example, $5 every Saturday for three weeks.
• Both names signed at the bottom.

Keep the IOU until the loan is paid, then mark it paid. Children should only ever borrow small amounts from family, with a grown-up knowing about it. Never borrow from anyone online, and never use a grown-up's card or account without asking first.

A note for the grown-up helping

The credit card figure is the Federal Reserve's average rate on credit card plans at commercial banks for the second quarter of 2026, about 21 percent; individual cards vary. If you lend your child money, an IOU with a repayment schedule teaches more than any explanation, and it works with play money too. Talking about your own family's rules for cards, without sharing any numbers or passwords, helps children see that a card is not a magic money source.

Common misconceptions

• Mistake: a credit card is free money. It is a loan. Every dollar is paid back, plus interest if the bill is not paid in full.
• Mistake: borrowing is always bad. It costs money, but a careful loan with a plan can help, like Mr. Lopez's oven.
• Mistake: you only pay back what you borrowed. Loans usually cost extra, called interest.
• Mistake: a debit card is borrowing. Debit uses money already in the account. Credit is the borrowing one.
• Mistake: a loan from family does not need paying back. A loan is a promise, whoever it is with.

Where this leaves us

• Borrowing means using something that belongs to someone else and giving it back. Money that is borrowed is a loan, and money owed is debt.
• Interest is the price of borrowing money, so borrowers usually pay back more than they borrowed.
• A credit card is a loan. In 2026 the average credit card rate at U.S. banks was about 21 percent a year.
• The case for waiting: borrowing costs, and the debt stays even if plans fall through. The case for borrowing: some important things are worth having now, and some loans help people earn more.
• Three questions settle it: what will it cost, can it be paid back on time, and could saving first work instead?
• Lenders trust people who have paid back before. An IOU writes a family loan down as a promise.

Sources

1. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Managing Credit, grade 4, standards 4-1 to 4-3). Interest as the price a borrower pays and the income a lender earns; why someone who borrows $100 usually pays back more; immediate use with later repayment; lenders and repayment history. councilforeconed.org
2. Board of Governors of the Federal Reserve System. (2026, October 7). Consumer credit, G.19. Commercial bank interest rate on credit card plans, all accounts, 20.94 percent in the second quarter of 2026. federalreserve.gov
3. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 5, Which way to pay? Credit as a loan, debit as money taken from an account, debt as money owed, and cards as no endless supply of free money. fdic.gov
4. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades Pre-K to 2, parent/caregiver guide: Lesson 6, Borrowing bills. Borrowing and lending, being responsible with borrowed things, and the library. fdic.gov
5. Consumer Financial Protection Bureau. (2024). School-age children and borrowing. Money as You Grow. Avoid using credit cards for things you cannot afford; interest is added unless the card is paid in full each month. consumerfinance.gov

Four gifts on one Saturday

A can of soup, a bag of outgrown sneakers, an hour of raking leaves and a hand-drawn card. On one Saturday in November, four children on the same street each gave one of these away.

• Omar asked his mom, then took a can of soup from the pantry and dropped it into the food drive bin at the grocery store.
• Grace and her dad filled a bag with sneakers and a jacket she had outgrown, all still in good shape, and took it to a donation center.
• Leo raked the leaves for Mrs. Kim next door, who has a sore back. She tried to give him a dollar, and he said no thank you.
• June drew a get-well card for her grandpa, who was in the hospital, and her mom mailed it.

Only one of those four gifts came from a store, and none of them used a single coin from anyone's pocket. All four were giving.

Four ways, side by side

Reading the table

Look down the last column. Only the first row needs money. Things need what your family can spare. Time and talent need nothing but you.

That means everyone can give something. A child with no money at all can still rake leaves, draw a card or read to a little brother. Many people find those gifts mean more than money, because they show you thought about the person.

Worth holding on to: You can give money, things, time or talent. Only one of those four needs money.

What a charity is

A charity is a group that helps people, animals or places in need. A food bank that collects food for families is a charity. So is an animal shelter that cares for lost pets, or a group that plants trees in a city.

Something you give to help is called a donation. A donation can be money, food, clothes, toys, or your time.

You do not always need a charity to give. Leo gave his time straight to his neighbor. June gave her card straight to her grandpa.

Why people give

People give for different reasons.

• To help someone they care about, like a birthday gift for a friend.
• To support a cause they believe in, like animals, the park or the library.
• To help people through a hard time, like a family whose house was damaged in a storm.
• Because helping feels good. Think of a time you helped someone. How did it feel?

Choosing a cause

A cause is something you care about and want to help with. Start with what matters to you.

Giving as part of a plan

In Lesson 10 you met the spend, save and share jars. The share jar is where planned giving lives. When money comes in, a family that uses a share jar puts some in it, along with the other jars. Then, when the jar is full enough, you choose a cause together.

How much goes in the share jar, and whether there is one at all, is your family's choice.

Giving safely

Sadly, some people pretend to collect for a good cause when they are not. The Federal Trade Commission, the part of the government that protects shoppers, warns that people running these tricks try to rush you, so you do not have time to check, and some use names that sound like well-known charities.

So here are the rules. Always give with a grown-up. Never hand money to a stranger who says there is no time to ask anyone. Never give money, your name, your address or any other personal information online. A real cause will still be there after you check with a grown-up.

No pressure, and no shame

Giving is a choice, never a rule. Some families give money every week. Some give time instead. Some are not able to give right now, and that is fine too.

And sometimes a family is the one that needs help. Food banks, clothing drives and kind neighbors exist because everyone needs help sometimes. Getting help is nothing to be ashamed of. The family that receives help this year may be the family that gives help another year.

The point: Giving is something you choose. It can be big or small, and it does not have to cost money.

A note for the grown-up helping

This lesson never asks your family to donate anything, and the activity can be done entirely with time and talent. If your family receives help from a food bank or another program, the lesson says plainly that this is normal and nothing to hide; you may want to say so yourself too. When a child does want to give money, helping them choose a cause and check it out together teaches more than the gift itself. The safety advice comes from the Federal Trade Commission's guidance on charity scams.

Common misconceptions

• Mistake: giving means giving money. Time, things and talent are giving too.
• Mistake: only rich people can give. Anyone can give time or talent.
• Mistake: it is fine to donate broken things. Give things in good shape that someone can really use.
• Mistake: anyone collecting for a good cause is real. Some are tricks. Always check with a grown-up first.
• Mistake: people who get help did something wrong. Everyone needs help sometimes.

Looking back

• There are four ways to give: money, things, time and talent. Only money needs money.
• A charity is a group that helps people, animals or places in need. A donation is something you give to help.
• People give to help someone they care about, to support a cause, to help in hard times, and because helping feels good.
• Choose a cause that matters to you, and give in a kid-sized way.
• The share jar is where planned giving lives, if your family uses one.
• Give with a grown-up, never to strangers in a rush, and never online on your own.
• Giving is a choice, and receiving help is nothing to be ashamed of.

Sources

1. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 7, It's great to donate. Charity and donation defined; planning for giving like saving and spending; donating clothes and toys, volunteering, and helping a food bank. fdic.gov
2. Federal Trade Commission. (n.d.). Before giving to a charity. Consumer Advice. Scammers rush donors, and some use names that sound like well-known charities. consumer.ftc.gov
3. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Earning Income 4-6; Spending 4-2). Reasons for gifting money to others, and spending to increase another person's satisfaction. councilforeconed.org
4. Consumer Financial Protection Bureau. (2026). Money milestones for school-age children and preteens. Money as You Grow. The ability to make money choices that align with a child's own goals and values. consumerfinance.gov

A box on the breakfast table

Look at the front of a cereal box. Not the cereal, the box.

Here is a made-up one called Crunch Stars. A cartoon astronaut gives a thumbs-up. The colors are bright purple and yellow. A star-shaped burst shouts NEW! The words AMAZING CRUNCH run across the top. A banner says FREE GLOW STICKER INSIDE! In the corner, a photo shows three children laughing at a breakfast table, and the words Kids love it!

Every one of those things was chosen on purpose, by people who were paid to make you want that cereal. The front of the box is an ad.

What an ad is for

An ad, short for advertisement, is a message a company pays for to help sell a product or a service. Ads are on TV, on signs, on boxes, on websites, in games and in videos.

The purpose of an ad is to persuade you, which means to try to get you to think or do something. An ad wants you to buy, or to ask a grown-up to buy, so that the company that paid for it makes money.

Ads are not all bad. An ad can tell you that a new library opened, or that something you already needed is on sale. Economists even argue about whether ads help shoppers by telling them about products, or just add to what things cost. But whatever else an ad does, its job is to sell.

Seven tricks to look for

Reading the cereal box, step by step

Here are five questions that take any ad apart. Work through them on the Crunch Stars box.

What matters here: An ad is made by someone who wants you to buy. Ask who paid, spot the tricks, and look for what the ad leaves out.

Now a harder one: the ad inside a video

Change one thing. This time Crunch Stars is not on a box. It is in a video.

A video-maker you love opens a box of Crunch Stars on camera. She gasps at the glow sticker, takes a big crunchy bite, and says it is her favorite breakfast ever. There is no jingle. It does not feel like an ad. It feels like a friend telling you about something good.

But the company sent her the cereal and paid her to show it. Under the video, in small letters, it says #ad, or paid partnership.

Run the same five questions and you find the same tricks: a famous face, feelings, a prize. They are just better hidden. That is the flip. The cereal box was easy to spot because it looked like an ad. The video is hard to spot because it looks like a show.

The Federal Trade Commission, the government office that protects shoppers, tells people who make videos and posts that they must say so when a company has paid them or given them something to show a product. It suggests clear words like ad, advertisement or sponsored. So whenever you see someone showing off a product, look for those words, and ask a grown-up if you cannot tell.

Ads in games and apps

Games are full of ads too. When doctors at the American Academy of Pediatrics looked at a study of the most-downloaded free apps for children under five, they found that 96 percent had ads or other selling in them: hidden ads, ads that pop up on their own, and ads that pay you game rewards for watching. In some games, the characters themselves asked players to buy things.

The Federal Trade Commission warns parents that some children's games say they have no ads, but they do. If a game keeps showing you ads, or keeps asking you to buy things, tell a grown-up. Never tap a pop-up ad. The next lesson is about what buying inside games really costs.

The shelf by the checkout

Some persuasion has no words at all. Next time you wait in line at a store, look at the shelves beside the checkout: candy, gum, small toys. Stores put wants right where you stand and wait, hoping you will grab one without planning to. Buying something you did not plan to buy is called an impulse buy.

Why ads are harder for younger kids

Doctors who study children and advertising say that children around 7 and younger mostly do not yet understand that an ad is trying to change what they think and do. Between about 7 and 11, children start to recognize ads and their purpose, especially when a grown-up talks about them with them.

Here is the surprising part. Even people who know an ad is trying to persuade them can still find it hard to resist, especially when the thing looks great. Knowing the tricks helps. Giving yourself time helps more.

Remember: When an ad makes you want something, wait a day before asking for it. If you still want it tomorrow, it was probably you doing the wanting, not the ad.

A note for the grown-up helping

The single most useful habit is talking about ads out loud as you meet them: a commercial, a cereal box, a video, a sign at the checkout. Younger children may not yet understand that ads are trying to persuade them, so your running commentary is doing real teaching. For videos and games, it helps to know that paid content should be labeled with words like ad or sponsored, but the labels are often small. The research summary is the American Academy of Pediatrics policy statement on digital advertising to children, published in 2020.

Common misconceptions

• Mistake: if something is in an ad, it must be the best. An ad shows only what the company wants you to see, and leaves out the rest.
• Mistake: a video from someone I like cannot be an ad. Look for ad, sponsored or paid partnership. Companies pay video-makers to show products.
• Mistake: I am too smart to be fooled by ads. Knowing a trick does not make anyone immune to it. Waiting a day is the real defense.
• Mistake: all ads are lies. Many ads share true facts. Their job is still to sell.
• Mistake: a free game has no selling in it. Many free games earn money from ads and from things players buy.

The short version

• An ad is a message a company pays for, made to persuade you to buy.
• Seven tricks to spot: famous faces, people like you, music and colors, magic words, feelings, everybody has one, and a deal or prize.
• Five questions take any ad apart: what is it selling, who paid, which tricks, what is missing, and who is doing the wanting.
• Ads hide inside videos, games and store shelves. Look for the words ad or sponsored.
• Younger children find ads hard to spot, and even grown-ups find them hard to resist. Talk about ads with a grown-up, and wait a day before asking for something an ad showed you.

Sources

1. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 2, Get set for goals. The purpose of advertising is to persuade others to buy; an ad as a notice a company pays for; talking about commercials together. fdic.gov
2. Stover, L., and Briggs, D. (2025). Did you get the message? [Lesson, grades 3-8]. EconEdLink, Council for Economic Education. Famous people, regular people, music, color, words like new, amazing and free, emotions, incentives, and the debate over whether advertising is wasteful. econedlink.org
3. Radesky, J., Chassiakos, Y. L. R., Ameenuddin, N., Navsaria, D., and Council on Communication and Media. (2020). Digital advertising to children. Pediatrics, 146(1), e20201681. Children's developing understanding of persuasive intent, trusted characters and celebrities, influencer content, and commercial content in 96 percent of popular free apps for young children. publications.aap.org
4. Federal Trade Commission. (2019). Disclosures 101 for social media influencers. Disclose any financial, employment, personal or family relationship with a brand, using clear terms like advertisement, ad and sponsored. ftc.gov
5. Federal Trade Commission. (2025, April 10). What to know about kids and video games, ads, and unexpected payments. Consumer Alert. Ads at every stage of play, and games that say they are ad free but are not. consumer.ftc.gov
6. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 1, Money matters. Stores place wants near the registers to encourage impulse buying. fdic.gov

A dragon outfit for 1,200 gems

A game on a tablet shows its store screen. A shiny button says 500 gems for $4.99. Below it is a dragon outfit for your character. Its price tag says 1,200 gems.

Here is the question for this lesson: how much real money does that dragon outfit cost?

It is harder to answer than it looks. Take a guess first, then work through it.

Step 1: What one gem costs

$4.99 is 499 cents. That buys 500 gems. So each gem costs just under 1 cent. To keep it simple, call it about 1 cent a gem.

Step 2: The outfit in dollars

If one gem is about 1 cent, then 1,200 gems is about 1,200 cents. 1,200 cents is $12.00.

So the outfit is worth about $12. That is the same as Ava's whole kite from Lesson 9.

Step 3: The packs do not fit

But wait. The store does not sell 1,200 gems. It sells packs of 500.

To get the outfit, someone has to spend $14.97 of real money, and 300 gems are left sitting in the game. The answer to the question is not 1,200 gems. It is $14.97.

Why games use gems instead of dollars

Games could show prices in dollars. Many use gems, coins, crystals or stars instead. The Federal Trade Commission, the government office that protects shoppers, points out that when real money is turned into game money like gems or coins, it can be tough for kids to keep track of how much real money they have spent.

Gems feel like play money. They are not. Every gem was bought with real money, often from a grown-up's card. The Commission puts it simply when it warns parents about games: each click can be a payment.

Bottom line: Gems, coins and other game money are bought with real money. Turn the price back into dollars before anyone decides.

Free games that sell things

Lots of games are free to download. So how do the people who make them get paid? Mostly two ways: by selling things inside the game, like extra game money, outfits and bonus levels, and by showing ads. You met the ads in the last lesson. The selling is what this lesson is about.

A free game is not a trick by itself. But it helps to know that the game is designed to earn money from players, and that small buys add up. A 99-cent upgrade bought ten times is $9.90.

The rule: only with a grown-up's yes

Here is the rule, and it has no exceptions. Buying anything online or inside a game happens only with a grown-up's permission, every single time.

Why so strict? The money is real, and it usually comes from a grown-up's account or card. A tap can spend it in a second, and it can be hard to get back. In 2022, one video game company agreed to pay $245 million in refunds to players, after the Federal Trade Commission said its game made it too easy to buy things by mistake, including children buying things without a parent's OK. Rules like ours exist because this really happens.

Keep your information private

Games and websites sometimes ask for information they do not need, and some messages inside games come from people who are not who they say they are. Never type any of these into a game, app or website without a grown-up:

• your full name, birthday, home address or phone number;
• the name of your school;
• any password;
• a bank account number or a grown-up's card number.

A message that says send your password and get 10,000 free gems is a trick to steal an account. Free offers online can be scams. Do not tap pop-up ads, do not answer messages from strangers, and show a grown-up anything that asks for information or money.

Tools grown-ups use

Grown-ups can change the settings on a tablet, phone or game so that purchases are turned off, need a password, or have a dollar limit. Those settings are there to protect the family's money, not to spoil the fun. Do not try to get around them, and do not ask for the password.

Making a choice like a planner

Sometimes a family decides that a game purchase is worth it. That can be a fine choice. Treat it like any other want.

1. Turn the price into dollars, including the leftover gems you would have to buy.
2. Compare it with your savings goal. The dragon outfit at $14.97 costs more than the whole kite.
3. Name the opportunity cost: what else could that money do?
4. Wait a day. If you still want it, talk it over with your grown-up.

Why this matters: The money behind a game purchase is real, and so is the thing you give up to buy it.

A note for the grown-up helping

The Federal Trade Commission suggests using the settings on your devices and game systems to turn off in-game purchases, require a password for every purchase, or set a dollar limit, and talking with your child about family rules for games. If your child does have permission to spend, doing the gem-to-dollar conversion together before each purchase builds the habit this lesson teaches. The $245 million figure is from the Commission's December 2022 settlement with a large game company. The lesson text does not name the company, so that it does not become a lesson about one game; the press release is listed in the sources.

Common misconceptions

• Mistake: gems and coins are pretend money. They are bought with real money.
• Mistake: a free game costs nothing. Many free games earn money by selling things inside the game and by showing ads.
• Mistake: if a card is already saved in the game, it is okay to tap buy. A saved card is still a grown-up's money. Ask every time.
• Mistake: a message offering free gems for your password is a prize. It is a trick to steal your account.
• Mistake: tiny purchases do not matter. Ten 99-cent buys are $9.90.

What you now know

• Game money like gems and coins is bought with real money.
• To find the real price, work out what one gem costs, multiply, and check how many packs you would really have to buy.
• The dragon outfit priced at 1,200 gems really costs $14.97, because gems come in packs of 500.
• Game money makes it harder to keep track of real spending, and each click can be a payment.
• Buying online or in a game happens only with a grown-up's permission, every time.
• Never share your name, birthday, address, school, passwords or card numbers in a game or online.
• Grown-ups can turn off purchases, require a password or set a limit.

Sources

1. Hebert, A. (2019, September 26). Video games, loot boxes, and your money. Consumer Alert, Federal Trade Commission. When real-world money is converted into in-game currency like gems or coins, it can be tough to keep track of spending; spending controls for parents. consumer.ftc.gov
2. Federal Trade Commission. (2025, January). Kids and video games. Consumer Advice. Games that encourage kids to buy digital goods, and restricting in-game spending by turning it off, requiring a password or setting a dollar limit. consumer.ftc.gov
3. Federal Trade Commission. (2025, April 10). What to know about kids and video games, ads, and unexpected payments. Consumer Alert. Each click is a payment, and parental controls to disable in-app purchases or require a password. consumer.ftc.gov
4. Federal Trade Commission. (2022, December 19). Fortnite video game maker Epic Games to pay more than half a billion dollars over FTC allegations of privacy violations and unwanted charges [Press release]. Includes $245 million in refunds over billing practices and children's purchases made without parental consent. ftc.gov
5. Consumer Financial Protection Bureau. (2024). School-age children and protecting. Money as You Grow. Keep personal information private, do not buy anything online without permission, and never click on pop-up ads. consumerfinance.gov
6. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades 3 to 5, parent/caregiver guide: Lesson 5, Which way to pay? Personal information not to share without a parent's permission, especially online. fdic.gov

Friday night: a plan on the kitchen table

On Friday night, Maya, who is eight, writes three words across the top of a sheet of paper: MAYA'S LEMONADE STAND.

Her mom has agreed to help her run a stand on their front step on Saturday morning. Before they start, her mom asks a question. "How will you know if your stand did well?"

"If I get lots of money," says Maya.

"Let's find out exactly what that means," says her mom. This lesson follows Maya's stand from Friday night to Saturday lunchtime, and the money ideas show up as she needs them. All the prices are pretend, round numbers, so the math stays easy. You can run the same stand at your own kitchen table with play money.

Maya is about to become an entrepreneur, a person who starts and runs a business. Her business makes a good, lemonade, and sells it to customers, the people who buy it.

What she needs: costs

First, a shopping list. To make and sell lemonade, Maya needs supplies.

The money a business spends on everything it uses to make what it sells is called its costs. Maya's costs are $8. Her mom pays for the supplies, and Maya agrees to pay her back out of the sales.

Her mom also lends Maya the big pitcher and the folding table for free. A real business would usually have to pay for its tools and for a place to work. Paying for a place is called rent. Maya is lucky. Her costs would be higher without her mom.

Choosing a price

Next, how much should one cup cost? Maya thinks about it out loud.

• "Ten cents? People would love that. But I would have to sell 80 cups just to make back my $8."
• "Two dollars? That is a lot for a little cup. Maybe nobody would buy one."
• "Fifty cents. People can pay with two quarters, and I can make change for a dollar easily."

She picks 50 cents. The price is how much the customer pays for one cup. Choosing it is one of the most important jobs an entrepreneur has, and Sunday's stand, in the next lesson, shows why.

Saturday morning

At nine o'clock, the table is out on the step. The pitcher is full and the ice is clinking. Maya has made a sign: FRESH LEMONADE, 50 CENTS A CUP. That sign is an ad, and an honest one: it tells people what she sells and what it costs, with no tricks.

The first customer is Mr. Diaz from next door. He hands Maya a one-dollar bill for one cup. Maya counts up from the price, the way cashiers do: "50 cents, and two quarters make a dollar." She hands him two quarters in change.

The morning is warm. People walking their dogs stop. Two neighbors buy a cup each and stay to chat. By noon the pitcher is nearly empty.

Counting the money: revenue

At lunchtime Maya counts the cash box, biggest coins and bills first. She has sold 24 cups.

All the money that comes in from selling is called revenue. Here is the quick way to work it out:

Revenue = price of one cup times the number of cups sold

That is 50 cents times 24 cups. Two cups make a dollar, so 24 cups make 12 dollars. The cash box holds $12.00, and the math matches.

What she really earned: profit

"Twelve dollars!" says Maya. "I made twelve dollars!"

Her mom smiles and points at the shopping list. "Remember the $8 for lemons, sugar, cups and ice?"

The $12 is not all Maya's to keep. $8 of it pays back the costs. Only what is left after every cost is paid belongs to the business. That is called profit.

Profit = revenue minus costs

Maya's profit is $12 minus $8, which is $4.

In short: Revenue is all the money that comes in. Profit is what is left after paying for everything you used. A stand did well if it made a profit.

The break-even point

Here is a useful question for any business: how many cups must Maya sell just to pay back her costs?

Each cup brings in 50 cents. Two cups bring in a dollar. To bring in $8, she needs 8 times 2, which is 16 cups. The 16th cup is called the break-even point: the number of sales where the money in exactly equals the money spent. No profit yet, but no loss either.

Read the first row carefully. If Maya had sold only 8 cups, the money in would have been less than the money spent. When costs are bigger than revenue, the business makes a loss.

The upshot: The first cups only pay back the costs. Profit starts after the break-even point.

Leftovers

When Maya packs up, she has 1 paper cup left from the pack of 25, half a bag of sugar, and two lemons. The cup and the sugar will keep. The lemons will not keep forever. Leftover supplies can help tomorrow's stand, or turn into waste if they spoil. Keep that in mind for Sunday.

What to do with $4

Maya pays her mom back the $8, and the $4 of profit is hers. Remember the three jars from Lesson 10. Maya puts $2 in her save jar for a kite, $1 in her spend jar, and $1 in her share jar. Another child might split it differently. That choice belongs to Maya and her family.

A note for the grown-up helping

The kitchen-table version needs no real money or real lemons: play money, a jug of water as pretend lemonade, and family members as customers work perfectly. If you decide to run a real stand, it needs a grown-up there the whole time, clean hands and clean cups, and a quick check of any local rules. The national personal finance standards for fourth grade ask children to estimate the income a children's business such as a lemonade stand could earn, and this lesson and the next do exactly that.

Common misconceptions

• Mistake: all the money in the cash box is profit. Part of it pays back the costs. Only what is left is profit.
• Mistake: the first cup sold is profit. The first sales pay back the costs. Profit starts after the break-even point.
• Mistake: costs are only things you buy at a store. Tools and a place to work cost money too, unless someone lends them for free.
• Mistake: a higher price always means more money. If the price is too high, fewer people buy. The next lesson shows how.

Summing up

• An entrepreneur starts and runs a business. Customers are the people who buy from it.
• Costs are the money spent on everything used to make what you sell.
• The price is what a customer pays for one cup.
• Revenue is the price times the number sold. Maya's 24 cups at 50 cents brought in $12.
• Profit is revenue minus costs. Maya's profit was $12 minus $8, which is $4.
• The break-even point is the number of sales that exactly pays back the costs: 16 cups for Maya. After that comes profit. Below it is a loss.

Sources

1. Federal Reserve Bank of St. Louis. (2019). Production profit and loss [Lesson, grades 4-8]. Costs of production as the cost of all resources used, including labor and rent; total revenue as price times quantity; profit as total revenue minus total cost; a loss when costs exceed revenue. federalreserveeducation.org
2. Federal Reserve Education. (n.d.). Lemonade for sale [Lesson, grades K-5]. Producers, consumers and the resources used to make a product. federalreserveeducation.org
3. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Earning Income, grade 4, standard 4-4). Earning income by starting a business, and estimating how much a business run by children, such as a lemonade stand, could earn. councilforeconed.org
4. Federal Deposit Insurance Corporation. (2021). Money Smart for Young People, grades Pre-K to 2, parent/caregiver guide: Lesson 2, Learn to earn. A lemonade stand as a way for children to learn about selling a product and earning money. fdic.gov
5. Consumer Financial Protection Bureau. (2025). Financial terms glossary. Profit as money made in a business after all the costs and expenses are paid. consumerfinance.gov

More cups, less money

On Sunday evening, Maya counts her cash box again. She sold 30 cups of lemonade today. On Saturday she sold only 24.

"Thirty is more than twenty-four," she says. "So I made more money today."

The cash box holds $7.50. Sunday's supplies cost her $9.00. Maya did not make more money on Sunday. She lost $1.50.

How can selling more cups end in a loss? Maya's idea sounds right, so it is worth tracing step by step to find exactly where it breaks. Grab play money and follow along.

What Maya changed on Sunday

Maya made two changes on Sunday, each based on an idea that sounded sensible.

1. "Cheaper means more customers." She lowered the price from 50 cents to 25 cents a cup.
2. "More customers means I need lots more supplies." She bought a new bag of lemons for $3, two packs of 25 cups for $4, and two bags of ice for $2. She still had half a bag of sugar and one cup from Saturday.

Her Sunday costs came to $3 plus $4 plus $2, which is $9.

Trace 1: the price

Start with the money coming in. Revenue is the price times the number of cups sold.

• Saturday: 50 cents times 24 cups is $12.00.
• Sunday: 25 cents times 30 cups is $7.50.

Maya's first idea was partly right. The lower price did bring more customers: 30 instead of 24. People usually buy more of something when its price is lower, and less when its price is higher.

But each cup now brought in only half as much. To take in $12 at 25 cents a cup, she would have needed 48 cups, twice as many as Saturday. Six extra customers were nowhere near enough.

Trace 2: the costs

Now look at the money going out. Maya bought supplies for a crowd that never came.

• She bought 50 new cups, added the 1 left from Saturday, and used 30. That leaves 21 cups she paid for and did not use on Sunday.
• She bought two bags of ice. By afternoon the second bag had melted into a puddle. Money spent on something that gets thrown away is waste.

Notice when those costs were paid: on Sunday morning, before the first customer arrived. A business pays for its supplies first and hopes its sales pay them back later.

Trace 3: putting the two together

Profit is revenue minus costs. Here are both days side by side.

Now the mistake is clear. Maya counted only cups. But profit depends on three things at once: the price of each cup, how many people buy, and what everything cost. On Sunday, the money in went down and the money out went up, so more cups ended in a loss.

The core of it: More sales do not always mean more profit. Profit is what is left after costs, and it depends on the price, the number sold and the costs together.

What if it had rained?

Imagine Sunday had been rainy and nobody came at all. Revenue: $0. Costs: still $9, because the supplies were bought in the morning. Maya would have lost $9 that day.

Some of it could be saved: cups and sugar keep for next time. But melted ice and soft lemons cannot be used again. That is why careful businesses buy only what they expect to use.

Finding a better price

So what is the best price? Not the lowest, and not the highest. Here are pretend numbers, a guess at how many people might buy on a Sunday like this at each price.

Read down the Revenue column. Very low prices bring crowds but little money. Very high prices bring in money from each cup but hardly anyone buys. The most money comes in the middle.

Now add careful buying. If Maya charges 50 cents and buys only one bag of lemons for $3, one pack of cups for $2 and one bag of ice for $1, her costs are $6. Selling 22 cups brings in $11. Her profit would be $11 minus $6, which is $5.

So what?: A loss tells a business owner something. Find the reason, change one thing, and try again.

Losing days are normal

Real businesses have bad days too: a rainy afternoon, a price that was wrong, too much ordered. What matters is the whole picture. Over the weekend, Maya made $4.00 on Saturday and lost $1.50 on Sunday, so her stand still made a profit of $2.50 for the two days.

That is one reason businesses keep some of their profit instead of spending it all: the money from a good day can cover a bad one, and it can buy supplies for next time.

The whole course at one stand

Look how much of this course showed up at one lemonade stand.

A note for the grown-up helping

The price table uses pretend customer numbers to show a real pattern: people tend to buy more at lower prices and less at higher ones, so the most revenue usually comes from a price in the middle. Running the activity with three different Sunday plans lets your child see profit and loss change with each decision. If your child runs a real stand, the same arithmetic applies; help them buy only what they expect to sell, and let them keep the records.

Common misconceptions

• Mistake: selling more always means making more money. If each sale brings in less, or costs go up, more sales can still end in a loss.
• Mistake: the lowest price is always best for a business. A very low price brings customers but little money.
• Mistake: if nobody buys, you lose nothing. The supplies were already paid for.
• Mistake: buying extra supplies just in case is always safe. Supplies that spoil or melt are waste.
• Mistake: one losing day means the business failed. Look at the whole picture, find the reason, and change something.

Putting it together

• Maya sold more cups on Sunday but made a loss, because each cup brought in less and her costs went up.
• Profit depends on the price, how many people buy, and the costs, all together.
• People usually buy more at a lower price and less at a higher price, so the best price is often in the middle.
• Costs are paid before any sales, so a day with no customers is a loss.
• Buying more than you need creates waste.
• A loss is information: find the reason, change one thing, and try again.
• Keeping some profit helps cover bad days and buy supplies for next time.

Sources

1. Federal Reserve Bank of St. Louis. (2019). Production profit and loss [Lesson, grades 4-8]. A loss results when total revenue is less than total cost; businesses lose money when quantity demanded is low or costs of production are high. federalreserveeducation.org
2. Kehler, A. (2015, September 14, last updated). Lemon squeeze: The lemonade stand [Lesson, grades 3-8]. EconEdLink, Council for Economic Education. Consumers buy more at lower prices and less at higher prices. econedlink.org
3. Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy. (2021). National Standards for Personal Financial Education (Earning Income 4-4; Spending 4-5). Estimating income from a children's business such as a lemonade stand, and how price influences purchase decisions. councilforeconed.org
4. Consumer Financial Protection Bureau. (2025). Financial terms glossary. Profit as money made in a business after all the costs and expenses are paid. consumerfinance.gov