Needs, Wants, and Smart Choices: Your Guide to Basic Economics

Economics is the study of how people use money and resources to meet their needs and wants. You make economic decisions every day like choosing what to buy with your allowance. Learning about Goods and Services is a great starting point for understanding how economics works in your community.

Before you can understand economics, it helps to know about Community Services for Basic Needs and the Jobs in Communities that help people get what they need every day.

A need is something you must have to stay alive and healthy like food, water, shelter, and clothing. A want is something you would enjoy having but do not need to survive, like a video game or a new toy.

For example, if you live in Winnipeg, Manitoba, a warm winter coat is a need because the winters are extremely cold. A large flat-screen television, however, is a want your family can live comfortably without it.

All people in Canada share four basic needs: food, water, shelter, and clothing. Everything else toys, candy, video games falls into the category of wants.

A good is a physical object that people can buy, sell, or trade something you can touch, like bread, a hockey stick, or potatoes grown on Prince Edward Island. A service is a helpful task or skill that one person does for another, like a dentist cleaning your teeth or a doctor checking your health.

Farmers who grow wheat on the Canadian prairies are producers people or businesses that make or grow goods to sell. When you buy bread at the store, you are acting as a consumer a person who buys and uses goods and services. Most people are both producers and consumers at different times.

Scarcity means there is not enough of something for everyone who wants it. Because money and resources are limited, you cannot always buy everything you want. This is why people must make choices.

When a family in Nunavut has $20 to spend, they should buy food a need before spending money on a toy a want. Needs should always come before wants when money is limited. You can use a budget a written plan for how to spend and save money to help make wise choices.

Learning about Making Decisions and Making Good Choices will help you understand how to prioritise needs over wants.

Income is money you earn through work like a farmer selling crops at a market. Spending means using that money to buy goods or services. Saving means setting money aside for future use instead of spending it right away.

For example, if you want a new hockey stick but do not have enough money, you can save your allowance over several weeks. Saving is a smart economic habit that helps you afford wants without ignoring your needs.

Need: Something you must have to stay alive and healthy, such as food, water, shelter, and clothing. You cannot survive without your needs being met.

Want: Something you would enjoy having but do not need to survive, like a toy, candy, or a video game. Life is more fun with wants, but you can live without them.

Good: A physical object that people can buy, sell, or trade something you can touch and hold, like bread, apples, or a hockey stick.

Service: A helpful task or skill that one person does for another, like a dentist cleaning your teeth or a teacher helping you learn.

Scarcity: When there is not enough of something for everyone who wants it. Because resources and money are limited, people must make choices about how to use them.

Income: Money you earn through work. For example, a farmer earns income by selling crops at a Canadian market.

Spending: Using your money to buy goods or services, like buying mittens from a local store.

Saving: Setting money aside for future use rather than spending it right now.

Budget: A written plan that helps you decide how to use your income wisely covering needs, wants, and savings.

Consumer: A person who buys and uses goods and services every day. You are a consumer when you buy food at a store.

Producer: A person or business that makes or grows goods to sell. Farmers, bakers, and factory workers are all producers.

Try sorting items into two groups: needs and wants. Think about food, shelter, clothing, and water as needs. Then think about toys, video games, and candy as wants. You can also look around your home and identify goods (physical objects) and services (tasks people do for you, like mail delivery).

Practice making a simple budget by listing your needs first, then your wants, and deciding how to spend a set amount of money. This connects to Decision Making, which you will explore as you continue learning about economics.

You have already learned about Goods and Services, Community Services for Basic Needs, and Jobs in Communities. You also explored Using Earth's Resources, Sharing Earth's Resources, and the Environmental Consequences of Economic Activities. All of these topics build the foundation you need to understand basic economics.

Basic economics connects to many other important topics you will explore. Understanding needs and wants leads directly to Decision Making you use economic thinking every time you choose how to spend your money. You will also learn about Types of Work and Types of Jobs, which show you how people earn income to meet their needs and wants.

The Exchange of Goods topic shows you how people trade goods and services, while International Commerce explains how Canada imports and exports goods with other countries. You will also discover how Resource Industries and Changing Industries shape the economy over time.

Topics like Sustainable Development and Labor Systems and Economic Activities show you how communities balance economic growth with caring for the environment. Democratic Processes connects to economics by showing how communities make decisions about shared resources and budgets.

After mastering basic economics, you will be ready to explore Community Needs, Resources and Industry, and Natural Resources topics that build directly on what you learn here about needs, wants, and scarcity.