Fidget Spinners – or rather the pursuit of them – has taken over our household in recent days.
For the last two weeks the kids have been begging me to visit, and re-visit, a variety of local stores so that they could check if these illusive little gadgets were back in stock. We trudged the shops, on multiple occasions, trying to buy one, but always left the store disappointed.
My son, in particular, has been very dedicated to the cause. He’s eager to proudly display his purchase and skills alongside all the other boys in his classroom. But before he could do that, we first had to find one!
Naturally, since I’m always open to the opportunity of having a ‘money talk’ with the kids, I used his dedication to chat about two really important areas of financial ‘know-how’: “Budgeting” and “Supply & Demand”.
As Danny clutched $10 of his allowance and we walked from one store to another, I asked him how much he expected a Fidget Spinner to cost. He replied that John had paid $4.95 for his last week, but Matthew’s mum had paid $7.95 yesterday, so he wasn’t sure. “I’m hoping it won’t cost more than $6” he said.
“That’s good”, I replied, “I’m really happy to see that you’ve set yourself a budget, a limit on the amount of money you’re willing to spend”. Then I continued, “Why do you think John paid less than Matthew, when they where both buying the same thing?”. Danny shrugged his shoulders and I took it as an opportunity to explain the concept of ‘Supply & Demand”.
Here’s how our “what if” conversation went:
“Ok” I said, “so we’re heading to the store to see if they’ve got more Fidget Spinners to sell, right?”
“Right” says Danny.
“So the store’s supply – is the amount they’ve got to sell of something. If they have 100 Fidget Spinners that is their supply…or if they only have 10, that is what have in store to sell, it’s their supply. Get it?”
“Yip” says Danny.
“Great” I said. “So if the store has the supply… where do you think the demand comes from?”
“The people that want to buy it?” Danny questioned.
“Correct!”, I said, “Whoever is selling has the supply, and whomever is buying has the demand. But what if the store knows that Fidget Spinners are the latest craze and every kid wants one…do you think they will increase the price of their supply or decrease it?
Danny responded, “Increase it of course; so that they make more money!”
“Right again” I said. “People that really, really want something, are happy enough to pay a little bit more for it. So if the demand for something is strong, stores can charge more for it until everyone has either gotten what they wanted, or the next ‘new thing’ comes out and everyone wants that instead. Get it?”
“Got it” said Danny.
“So what if the store got in a supply of 100 Fidget Spinners because they thought 100 kids would come looking for them, but only 50 kids bought one…what would they do then?
“Cry and be really mad with themselves?” said Danny,
“Maybe” I said “then they’d probably discount the stock they had left so that people would be more motivated to buy them”.
“Makes sense”, said Danny as we stood outside the store.
So, armed with his mothers ‘wisdom’, his $6 budget and his $10 note…Danny came back with a grin on his face and $3 change.
“What happened to only spending $6 Danny?”, I asked.
“Ah, Mom, it was only $1 extra, I’ll stick to the budget next time!”
My work continues…
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