How to explain economics to a five year

old?

Children may have this question in their mind “What is

economics?” They might hear it in the news. They might hear it
from their elders. It may be hard for parents to explain what
economics is to their children. However, people don’t have to
be to a specialized economist in order to explain economics to
their children.

What is economics? When people hear the word economics the

first thing that may come into their mind is that it is money.
Economics is not only just about money. It is how the society
will use the resources. It deals with the production, distribution
and consumption of goods and services.

However giving kids a textbook definition will make them loose

interest. Even adults will find it boring. A better approach to
define economics to a kid might be by giving examples of how
economics takes place in our lives. Some examples that we
could give are as follows:
 A bad economy means that we have to spend less money.
 A good economy means that we can spend our money
with freedom.
  A bad economy means that there are no jobs available.
 A good economy means that jobs are available to people.
Giving example like these to kids may actually allow them to
understand the basics of economy. The best way for kids to
grasp the meaning of the economy is to let them make financial
transactions. Show your child how to earn money with an
allowance. Teach them to save it, how to make a budget, and
how to save up for big purchases. This helps them learn the
importance of economic decision. Games such as Monopoly
actually show how the economy works and at the same time
the kids are able to enjoy. The games feature options to buy
and sell, and the success of a player depends on their ability to
balance short term gains with long-term goals, exercise
restraint, and strategize how to make the most of the resources
they have on hand.

Economics is a very both hard and complicated subject to

understand. Even many adults do not full understand what
economics is. Therefore, if a children were to ask what is
economics the best way would be to keep everything simple.
Use real life situations, keep it less text based, and make it
colorful. Then and only a child will be able to understand
economics. If a textbook definition is given to them straight
away they wouldn’t be able to understand anything. They need
to know the basics of it first, then and only will they
understand.