Money conversation: profit from division

In an earlier post, I wrote about an experiment I carried out during a recent family holiday. Whilst the experiment didn’t give the result I was hoping for, there was a money lesson in it for my children.

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My eight-year old wanted chewing gum.  This is not something I approve of, but he got me on a technicality that this is not junk food. He had enough ‘good behaviour’ money to buy a small packet for $2 or a big pack of 3 for $4.30. Both his brother and sister wanted chewing gum – neither could afford it (each only had $2 of ‘good behaviour’ money).

My eight-year old sensed an opportunity to make some money. He bought the big packet of chewing gum for $4.30. He offered to sell each individual packet to his siblings for $1.90 each. His siblings were willing to pay $1.90 for their chewing gum because this was still cheaper than buying them for $2 at the shop.

We had a few money conversation with our eight-year old:

(1) This is how some shops make money – buy things cheaply in bulk, then on-sell at a mark-up.

(2) Why some people buy smaller things at a higher price even though bulk-buying is cheaper (wastage, storage).

(3) Why his siblings might still buy from him even if he had sold it for $2, the same price as the shop (convenience).

After the money conversation, we then turned to ‘charity begins at home’. He decided to reduce his price to $1.50 each packet.

What brilliant ideas have your children come up with to make money? Share it wish us in the comments.