Classroom Economy: Understanding Credit and Debit

Merchant Warehouse |

January 31, 2012

Merchant Warehouse has been an innovator in the merchant services industry since 1998, building our reputation by educating and empowering the business owners that put their trust in us for their payment processing needs. With our Resource Center we hope to expand our offerings and look to develop informational and educational resources on a vareity of topics concering commerce and credit, looking at not only the environments of the present day but also the history and future of these subjects. The following is an article developed for students and teachers on better understanding credit and debit in today's world.

Classroom Economy: Understanding Credit and Debit

Students learning about the economy can greatly benefit from classroom activities and lessons that promote responsibility and encourage student success. A classroom economy gives students the tools needed for a general understanding of how the real world works. Students can take part in job creation and availability, earn money for items or obtain special privileges, are given responsibilities in which they will need to budget their money, and learn valuable concepts, such as supply and demand. Creating a classroom economy gives students the opportunity to make smart economic decisions and realize the consequences of those decisions. Learn more about establishing a classroom economy, what tools are needed, and how to get students motivated to succeed.


Determine how students will earn money in their classroom economy. Teachers can decide to give students individual “jobs” or separate students into groups to form various types of businesses. If the students will be performing individual jobs, create job postings that list a description of the job, as well as the salary that it will earn. Conduct interviews to give students a glimpse of how the real world works when job searching. If the students are separated into businesses, have each group brainstorm a concept based on the law of supply and demand. Have each business market their product or service idea to the rest of the class. Ensure that all prices and earnings are realistic, according to the range of money supply in the classroom.


Create guidelines that will tell students what privileges they can get with the money they have earned. Student privileges can vary, depending on the age of the children participating in the classroom economy. Younger students can spend money on small items, such as pens, pencils, or colorful erasers. Students may also be able to earn several extra minutes at recess time or a few extra points on a homework assignment. Match up a dollar amount to each privilege and ensure that the students understand that they must earn money to receive these privileges or gifts.


Each student will play an important role in how the economy grows. Assign students important jobs that will be able to interact with other jobs in society. One or two students should take on the responsibility of the banker. This student will keep record of withdrawals and deposits for the entire class. One student can be assigned the job of an economist. This person is responsible for studying the behavior of student shoppers, as well as keeping track each week of how much other students make and spend. Other ideas for classroom jobs include behavior patrol, reporter, librarian, equipment manager, computer tech, homework helper, and paper passer.


Decide how items that are for sale in the classroom will be disbursed to students. For example, items may be sold to students with money through public auctions or by set prices in the classroom store. Ensure that prices are realistic, compared to other classroom businesses and job salaries. Auctions can start out low and students can decide what they may be willing to pay for a certain item, depending on the amount of money they have earned.


Have students design classroom money. Create money of different colors that will represent different amounts of money, which should also be printed on the money itself. Small items, such as washers, nuts, screws, or bolts, can be used for change. Student money does not have to represent American dollars. Have the students create their own name for their currency. Money should stand for amounts that will make it simple to give and receive change for items and services.


Students will be given certain responsibilities that require the understanding of how money and budgeting works. Each student will have to pay a certain amount each month for rent. The teacher can decide on other required debits and credits to assign students. Create a payday each week and show students how to deposit and withdraw money from their account. Teach students how to properly fill out and use a ledger sheet. Allow students to earn extra money in multiple ways, such as by displaying great citizenship skills or by helping other students. Create a list of fines that will deduct money from a student’s account for various reasons, such as for missing homework or supplies, for being tardy or for rudeness.


Review concepts with students to help them better understand economics. Discuss the concept of taxes, what they are, and how they are used. Explain that each person who receives a paycheck must pay out taxes to the state and federal governments. In reality, taxes would be taken out of their wages in each paycheck. Further discuss the concept of supply and demand. Explain that the products that they sell or the services they provide are known as “goods,” and the purchasers of the products create a “demand.” At the close of the classroom economy unit, talk with students about their losses and profits, as well as their income, expenses and their experience as professionals in their field of work.