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  1. Teaching Financial Literacy to Kids: Introduction
  2. Teaching Financial Literacy to Kids: What Is Money?
  3. Teaching Financial Literacy to Kids: Earning Money
  4. Teaching Financial Literacy to Kids: Goods And Services
  5. Teaching Financial Literacy to Kids: Needs And Wants
  6. Teaching Financial Literacy to Kids: Spending Choices
  7. Teaching Financial Literacy to Kids: Saving for Short-Term Goals
  8. Teaching Financial Literacy to Kids: Saving Accounts
  9. Teaching Financial Literacy to Kids: Conclusion

Goods and services are one of the most basic ideas in economics. Economics is the study of how resources are used to provide goods and services, and how they are made, distributed, consumed and exchanged. Tweens and teens will be able to apply their understanding of goods and services to more advanced economics concepts such as scarcity and supply and demand. Younger kids, however, benefit from simply understanding that we use money to buy both goods and services, and it’s helpful for children to be aware of the difference between the two. In simple terms, goods are objects and services are actions.

Goods

Goods are things that are made or grown and something that you can use or consume. A good way to explain the concept to kids is to tell them that goods are things they can touch. Have your child look around a room at home and see how many goods they can name. The list might include things like:

  • books
  • Cheerios
  • computers
  • dishes
  • furniture
  • games
  • pictures
  • mobile phones

Goods are things that people buy to use one time (such as a piece of candy) or over and over (for example, a toy). Some goods are manufactured (or made) – for instance, clothes, cars and computers. Other goods are grown, including fruits and vegetables. Explain that many goods are made from natural resources. For instance, trees are used to make pencils, paper, furniture and playgrounds; cotton is used to make clothing and copper is used to make wire and coins (like pennies).

Services

A service, on the other hand, is work that someone does for someone else. Where a good is an object, a service is an action. Your child may have heard the term "community helper" at school. Community helpers are people who work within the community to help residents. Many provide services, including those performed by:

  • bus drivers
  • firefighters
  • librarians
  • maintenance workers
  • paramedics
  • police officers (including school resource officers)
  • postal workers
  • schoolteachers 

Some services, including some of the ones listed above, are paid for by taxes or money that has been paid to the government – which means your family doesn’t pay directly for these services. Other services are paid for by the person using the service. Examples include:

  • builders
  • car mechanics
  • chefs
  • dentists
  • doctors
  • electricians
  • hairstylists
  • nurses
  • plumbers

Goods from Services

Some people and companies provide services that result in goods. For example, a chef provides the service of cooking food that people buy and eat (goods), and farmers provide the service of planting and harvesting the food that people purchase and consume. Goods and services can be confusing to young children, especially when the line between them is blurred, as is the case between the chef and the food. To check for understanding, name a few goods and services (for example, a book) and ask your child:      

  • Is this a good or a service? (a good)         
  • Who could use it? (anyone)
  • Why would they want to use it? (to learn, for enjoyment, etc.)

These kinds of conversations will help younger children begin to understand how the world works.


Teaching Financial Literacy to Kids: Needs And Wants
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