Economics Comes Home

Why Is Studying Economics Important?

As a child, I never studied economics as a separate subject. However, helping my parents with their small business taught me about the flow of the real economy. These experiences significantly helped me understand economics as I grew up.

 

Recently, I read Robert Kiyosaki's book Rich Dad Poor Dad, where the author emphasizes that people are poor not because they lack money but because they avoid financial knowledge and view money as taboo. Isn't it frustrating to live in poverty simply because we choose to ignore essential financial knowledge that is critical for survival?

 

Understanding economics is directly connected to leading a better life. The earlier and deeper we study economics, the more beneficial it is. In a capitalist society, studying economics is not an option—it’s a necessity.

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Economics Is Embedded in Everyday Chores

As mentioned earlier, I learned about the real economy while helping my parents with their business. For example, as a child, I had to buy a head of cabbage from the market every week. One day, the vegetable vendor informed me that the cabbage price had increased by 500 KRW, so I needed to pay 3,000 KRW instead of the usual 2,500 KRW.

 

Since my parents had always given me only 2,500 KRW, I was in a bind. Not wanting to make a second trip, I boldly asked the vendor to cut a portion of the cabbage for 2,500 KRW. Amused by my naive suggestion, the vendor laughed and let me take the whole cabbage for 2,500 KRW. Feeling a sense of accomplishment, I walked home proudly. At nine years old, I learned for the first time that prices are not always fixed and can change.

 

When I got home, I asked my mother why the cabbage price had risen. She explained the principle of supply and demand using bread as an example. She asked, "If you owned a bakery, what would you do if two customers wanted to buy the same loaf of bread?" I answered that I would raise the price since demand exceeded supply. My mother praised me, and I still vividly remember that moment. That day marked the beginning of my understanding of supply and demand—a fundamental economic principle. As this story shows, even small errands can serve as a fun way to teach children about economics.

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1. Pay for Chores: Understanding Wages
   
   Parents can use everyday activities to teach children economics in simple ways. Children often don’t understand how parents earn money. By rewarding them for meaningful work, like helping with chores, you can show them the value of labor. For instance, if they complete a task, praise them and pay them a small reward. This teaches children that labor equals compensation in the form of money or goods.
   
   
2. Compare the Price of a Single Item: Understanding Supply and Demand
   
   Take your child to the store and have them remember the price of a specific item. Over time, they’ll notice prices fluctuating and start asking why. This is a great opportunity to explain the principle of supply and demand. Just as my mother explained supply and demand with bread, you can do the same with a product they’re familiar with.
   
   
3. Deposit Allowances in a Bank Account: Understanding Interest
   
   Explaining interest to young children can be challenging, but it can be done through allowances. Instead of giving them cash, deposit their allowance into a bank account. Take them to the bank so they become familiar with it from a young age. They’ll enjoy watching their account balance grow and may ask questions like, “Why is there extra money in my account?” You can then explain that banks pay interest as compensation for holding money, which they lend to others to generate profit.
   
   
4. Encourage Them to Save Money While Shopping: Understanding Investment
   
   Give your child a small budget (e.g., 20,000 KRW) and ask them to buy specific items like soy sauce, sugar, and milk. Emphasize the importance of bringing back the receipt and leftover change. Later, repeat the task, but this time allow them to keep any remaining money. This will motivate them to compare prices and buy cheaper items. Afterward, compare receipts and show how much they saved. Explain that this act of saving money is called "investment" and requires effort, research, and wise decision-making.

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