Teaching Economics to an 8 Yr Old

Jack has the biggest heart. He is such a sweet boy. Last week he had a friend have a birthday. Jack wanted to go to the store and have us spend 30-40 dollars on a toy for this child. I was against this for a couple of reasons. The first being money- We are extremely tight in that area right now due to me being docked the past couple of months repaying the district the time I owe them while I was in the hospital. That ends this month THANK GOODNESS. The second, I know the child and to throw any kind of money at this kid is a waste. The boy is nice and all but he does not exactly take care of his stuff. If this were a few other kids I know MAYBE but not this one.
So it was time to explain the economics of the situation to Jack. Tracey was getting a bit frustrated with Jack because anything she suggested as a gift that was less expensive he dismissed as LAME! So I decided to explain it in a way that Jack would appreciate. I thought I did pretty well and Jack seemed to really understand it. Here is where I went with it….
Okay Jack it is like this. We have the money to do whatever it is we want to do as a family. That does not mean that the money has no end. It means that we have a CHOICE of where to spend the money as a family Jack. If you want to spend the money we have on a very expensive birthday present for your friend we can do that. BUT…what that means now is that you will get to spend ONE LESS DAY on the beach next month in Corpus Christi. That means ONE LESS DAY exploring the LEXINGTON and going to the aquarium. You see Jack if we spend the money on your friend’s birthday present then there is no money to stay an extra day in Corpus. It is called a BUDGET Jack. Everyone has one. Mommy and Daddy have budgeted money to go on vacation. Because we moved our trip to next month we are getting to stay an EXTRA DAY because we will have more money in the budget. Now the choice is yours Jack. The money for the present is going to come from this budget. So what is it going to be? Are we going to buy an expensive toy from our vacation money and lose a day at the beach? OR do you want to get something for your friend within mom’s asking price and keep the extra day at the beach?
Now you and I both know that the present was not going to cost us a DAY of vacation but that is all I had that I knew Jack would see the sacrifice that would need to be made. He REALLY is excited about the beach and the USS Lexington.
So in about two minutes Jack made the decision. He approached Tracey and I and he held out his hand. In his hand was a Nintendo game that he never played. He made the announcement that he wanted his friend to have this game because he knew he would like it and Jack had grown tired of it. WELL ….. PROBLEM SOLVED….and it did not cost us a dime. Tracey wrapped it up and off we went to the party.