Lesson 1

Understanding What I Need

Lesson Goal:

Lesson 1 discusses: 1) the role of money; 2) individual decision-making; 3) scarcity and opportunity costs (trade-offs).


Lesson Objectives:

The students will:

  • Describe the money's role in achieving life goals.
  • Explain that people's decisions are influenced by what they value.
  • Define scarcity, opportunity cost and income.
  • Tell that needs may use up most of income.
  • Recall where reliable financial resources may be found.


Content Standards Addressed:

Common Core State Standards

National Standards



  • Need - a good or service that is necessary in order to live
  • Income - money that is earned or given
  • Opportunity cost - (also known as a trade-off) in decision-making, the value of the next-best alternative not selected 
  • Scarcity - limitations of available resources
  • Want - a good or service that is not necessary in order to live 


Part 1: Understanding My Future

Materials Needed:


Activity: Future Me 

Invite the students to imagine their lives in 20 years:

  • What kind of career will they have?
  • In what city will they live?
  • In what type of housing will they live?
  • What will their families be like?
  • How will they spend their free time?
  • What type of transportation will they use?
  • Will they travel? Where?

You may wish to hold a "Future Day." Each student could prepare a paragraph describing his life in the future and come dressed as a future version of him or herself.


Reproducible: Facing the Future *

Make copies of the reproducible Facing the Future for every participant. Have the students complete the reproducible as you discuss it together according to the outline. The answers are found here.

*Keep the completed worksheet for use in Lesson 3.

The worksheet shows expenses a young adult might have 10 years from now, when your students will be adults. For simplicity's sake, all amounts have been rounded as much as possible.

Needs and Wants

The first column shows needs and wants of a young adult aged 18-25. Needs are things that are necessary in order to live a healthy life. Wants are things that are nice to have. They help people enjoy life but are not needed to live.

Discuss each category in the first column.

  • If the item is a need, write Need in the second column.
  • If the item is a want, write Want in the second column.

Discuss the special category (in gray), College education:

  • Is a college education a need or a want?
  • A college education is expensive, but necessary for many types of jobs and careers.
  • Community college is much less expensive and may be a good alternative.
  • College financial assistance (scholarships, grants and student loans) is available.


Income is the amount of money a person earns or is given.

Income, Needs and Wants

How does the income compare with the total cost of needs?

1. Circle the categories that have Need beside them. They should NOT include the cost of a college education.

2. In the last column, write the dollar amount of only those categories. (See table on previous page.)

3. Total the amounts.

4. Write the total cost of needs at the bottom of the last column. (The answer is $32,500.)


Compare income ($40,000) with Total Needs ($32,500).

  • Will they have enough money to afford all their needs? (Yes.)
  • Will they have enough money for their wants? (They'll have to make very wise buying decisions to afford some of them.)



  • Why do you think the cost of a college education wasn't included in the total? (The annual cost can be very high.)

You may want to point out to the students that scholarships and grants - which help make college affordable - usually depend on good grades and extracurricular activities, among other things. Their hard work in school may well be rewarded later on!

After completing the exercise, review:

  • It's important to understand the difference between needs and wants.
  • Needs must come before wants.
  • We must pay for needs and wants from our income.

In order for the students in your group to afford all of what they need and most of what they want as young adults, it will be important for them to plan ahead and think carefully before making buying decisions. Experts say many people never reach some of their life goals - what they really want in life - because they haven't planned well financially.


Part 2: Understanding What I Value

Materials Needed:

  • Copies of the What Do I Value? reproducible.
  • Large pieces of paper or poster board.
  • Magazines.

 What matters most to each of the students in your group:

  • Sports?
  • Art and music?
  • Their education?
  • Their faith?
  • Their friends?
  • Traveling?
  • Experiencing life to the fullest?
  • Helping people who have needs?

What we value, or consider important, influences our attitudes and actions. By knowing ourselves better and understanding what matters most to us, we can make the best possible life choices, choices that will be right for us.


Reproducible: What Do I Value?

Makes copies of the reproducible, What Do I Value? for each student. Have the students complete it independently. Please keep the completed worksheet to use in Part 3. 


Activity: What I Value Collage

Give each student a large piece of paper or poster board and invite them to cut and paste magazine photos or illustrations of what they value. They can also draw pictures or download free clip art from a safe, reliable website. They may cut out letters and/or words from magazines to label the photos/pictures. 


Part 3: Understanding Scarcity And Opportunity Costs (Trade-Offs)

Materials needed:

In Part I, the students learned that money can open doors of opportunity in the future. They also learned that people's needs - what they have to have to live a good, healthy life - often take much of their incomes. What money remains can be spent on wants - things that aren't necessary, but make life more enjoyable.


  • What are needs? (Things people have to have to live, like housing and clothing.)
  • What are wants? (Things that make people's lives more pleasant, but aren't needed to live. These include recreational activities, video games, etc.)


  • Do most people have enough money to afford all their needs? (Many do.)
  • Do most people have enough money to afford all their wants? (No.)

Although people have unlimited wants, their time, money and other resources are limited. This is known as scarcity. Because of scarcity, all of us must make choices. As the students get older, money will play a larger, more important role in their lives. They'll be faced with complex financial decisions, some having potentially long-term consequences.

How will they make the best choices?

In Part 2 of the lesson, the students discovered what they value most. Understanding what matters most to us can help us do things in order of importance. Since scarcity tells us we can't have everything, this is necessary so we can make the best choices in life, including choices with money.

With every choice we make, we gain something as we give up other things. The most important thing we give up when we make a choice is called the opportunity cost or the trade-off.


  • Do all people face scarcity or limited resources? (Yes.)
  • Does everyone have to live with opportunity costs? (Yes. Though wealthy people seem to have nearly unlimited resources, they also face opportunity costs.)


Activity: Kool-Aid® Scarcity

An excellent scarcity activity using Kool-Aid® may be found at this website.


Reproducible: Real-Life Scarcity: World War II Rationing

Make copes of the reproducible Real-Life Scarcity for every student. Read and discuss together, or assign it as independent work.

Discussion Points:

  • What might be a parent's opportunity cost for buying shoes for his children? (Buying shoes for himself.)
  • Did the women mentioned in the article consider nylon stockings a need or a want? (A need.) How do you know? (They were willing to pay high prices.)
  • According to the article, how did the following items rank in importance? Make 1 the most important and 3 the least important.
    • American citizen needs (2)
    • American citizen wants (3)
    • U.S. military needs (1)
  • What was an auto manufacturer's opportunity cost for making military equipment? (Making cars for American citizens.)
  • Why do you think the factories were willing to stop selling cars? (Answers will vary. Possible answers include: 1) They thought it was more important to contribute to the war effort; 2) They might have been paid more money to make military equipment than they would have received making and selling cars, which had been rationed anyway.)
  • If the government hadn't rationed certain goods during World War II, what might have happened? (Answers will vary. Possible answers include 1) Materials and goods that were in short supply would only be available to those who could afford to pay high prices; 2) The U.S. military might not have had the food, materials or fuel needed to fight the war successfully.)


Activities: Rationing

1. Invite someone who lived through World War II rationing to come speak to your group about:

  • Their memories of life at that time.
  • How their family adapted to rationing.

2. The students may enjoy viewing the online exhibit about World War II rationing at this website.


Reproducible: Scarcity and Opportunity Cost

Make copies of the reproducible Scarcity and Opportunity Cost for every student. You may assign it as independent work or discuss it together as a group. Answers can be found here.

The students in your group discovered opportunity costs are different because what matters most to people - what they value - is different. Making good buying choices isn't just about comparing prices, although that may be a big part of the decision. People also make these choices based on costs, what they have to give up.

Financial decision making can be difficult. For those with limited financial resources, like the students in your group, it's even more challenging. To make the wisest choices, they should take time to consider the options, gathering reliable information from:

  • Websites in the .org,.edu and .gov domains.
  • Books and magazines written by respected financial authorities.
  • Family members and trusted adults.

(Age-appropriate resources can be found here.)