Hey there! I’m Zara, and I’m 12 years old. I started Assetsforkids to help kids learn about money. I want to teach you about making smart choices.
Today, we’re going to talk about something very important. It affects every decision we make. You might think it’s boring or too grown-up. But, you already know more than you think!
When you decide to wear a helmet on your bike, you’re thinking about safety and fun. Choosing to do homework instead of playing video games is about getting good grades later.
Even looking both ways before crossing the street is a smart choice! These everyday actions are all about risk reward for kids like us.
I’m going to share what I’ve learned. I promise it will be fun and easy to understand. By the end of this article, you’ll know when something is worth trying!
What Are Risk and Reward?
Risk and reward are easy to get. I’ll explain it in a simple way.
A risk is when you might lose something or something bad might happen when you try something new. A reward is the good thing you might get if you take that risk.
For example, when I tried out for the school play, I risked not getting a part. But I also hoped to have fun. Guess what? I got a small part and loved it!
Risk and reward are all around us. Like when you raise your hand in class. You risk being wrong but might feel proud if you’re right.
Spending your allowance on a new game is another example. You risk not having money later. But you get to have fun now.
The cool thing is, once you understand how risk and reward work, you can make better decisions about everything. These ideas help with friends, homework, and money. Learning them early makes life easier!
Understanding Risk and Reward in Kid-Friendly Terms Through Games and Fun
Games make learning about risk and reward easy for kids. You have so much fun, you don’t even notice you’re learning!
The Stock Picking Game is my favorite. It teaches kids about investing in a fun way. I pick companies I love, like Disney or Apple. Then, I pretend to buy their stocks with fake money.
Every week, I check how my stocks are doing. Sometimes the numbers go up and I get excited. Other times they go down and I learn about risk. It’s like watching a roller coaster made of numbers!
I also made my own Decision Game for everyday choices. Here’s how it works: I write down any decision I need to make. Then, I list all possible good things and bad things that could happen.
When deciding about joining soccer, I thought about the rewards and risks. The rewards included “make new friends” and “get better at sports.” The risks were “less free time” and “might get hurt.”
The rewards looked bigger than the risks, so I joined the team. It was the best decision ever! You can try this game with anything – spending your allowance, trying out for school plays, or even choosing what classes to take next year. It makes every choice feel less scary and more exciting.
Small Risks I Take Every Single Day
I bet you don’t realize how many small risks you take every day. They’re everywhere! From waking up, I make tiny choices that teach financial literacy children can learn from.
When my alarm goes off and it’s cold, I risk being chilly by getting up. But I get rewarded by not being late for school and avoiding trouble with my teacher.
Here’s a perfect example of money decisions kids face daily. When I see that cool $3 pen at the store, I risk spending my allowance money. The reward? Having an awesome pen that makes homework way more fun!
Eating breakfast when I’m not super hungry is a small risk. I might feel too full, but I’m rewarded by not having a growling stomach during math class.
When I choose to do my chores without being reminded, I risk using up my free time. But I get rewarded by keeping my allowance and making my parents happy. Happy parents usually say yes to more things I want!
Wearing my bike helmet is another daily risk. I might look less cool, but I’m rewarded by protecting my brain. These tiny decisions add up and teach me how to handle bigger choices with money and life.
Big Risks vs. Small Risks
Learning to tell big risks from small risks changed my life. Small risks are like dipping your toe in the pool – they’re not a big deal if they go wrong. Big risks are like jumping off the diving board – they can have big consequences, both good and bad.
What happens if things don’t work out is key. Small risks might make me feel sad for a day or two. But big risks could change my life for weeks, months, or even longer.
In school, I take small risks all the time. Like raising my hand to answer a question. If I’m wrong, I might feel embarrassed for a few minutes. But if I’m right, I feel great and learn something new.
Choosing not to study for a big test is a huge risk. The reward might be having more free time today. But failing the test could affect my grade for the whole semester. Teaching children about risk starts with these everyday school examples.
Money and Saving Examples
With money, small risks include spending my allowance on a new toy instead of saving it. If the toy breaks quickly, I’m out a few dollars. That’s manageable.
A big risk would be spending all my birthday money on one expensive item without thinking it through. If I don’t like it or it breaks, I’ve lost a lot of money that took months to save. Risk management children can practice involves learning to pause and think before making big money decisions.
The trick is recognizing which category each choice falls into before I decide.
Different Types of Rewards I Can Get
There are four amazing types of rewards. Each one feels special in its own way. Learning about these rewards is one of my favorite kids investing basics.
Money rewards are easy to get. Saving my allowance earns me interest money. Doing extra chores gets me more allowance. I even made money selling old toys online.
Feeling rewards are sometimes better than money. Solving hard math problems makes me feel proud. Making a new friend makes me happy.
Learning rewards happen when I try new things. Even if I fail, I learn something valuable. Like when my cookies were bad, I learned to follow recipes.
Future rewards are hard to wait for but worth it. These children money lessons teach me to study hard. Saving money now means I can buy something special later.
My Simple Method for Making Risk and Reward Decisions
I’ve learned a lot from my decisions and mistakes. I made a simple way to decide if a risk is worth it. It’s called my “Three Question Test,” and it works for many things.
This method helps me make better choices about money and life. It’s great for teaching financial literacy children need as they grow. You can use these questions for any decision you face.
I always think about the downside first. If I spend my birthday money on a new video game, I might not have money for other things. If I audition for the school talent show, I might not make it and feel embarrassed.
Being honest about the bad stuff helps me prepare. Most of the time, the worst case isn’t as scary as I first think.
What’s the Best Thing That Could Happen?
Then, I imagine the amazing outcomes. That video game could give me hours of fun with friends. The talent show audition might lead to performing on stage and feeling super proud.
This step gets me excited about the possibilities. It helps me see if the potential rewards are worth the risk.
Do I Think It’s Worth Trying?
Lastly, I weigh everything together. This risk reward for kids approach has taught me that most small risks are worth taking. The key is making sure I can handle the worst case scenario.
If the answer is yes, I go for it. If not, I wait for a better opportunity.
What I Do When Things Don’t Work Out
When my plans don’t work out, I have a special way to handle it. The first thing I do is let myself feel disappointed for a little bit – it’s totally okay to be upset when things don’t go right!
I remember when I spent $15 on a mystery box of toys online and got stuff I didn’t even like. I was really bummed out at first. But instead of staying sad about it, I decided to turn it into a learning experience.
Now I have a simple process I follow whenever something doesn’t work out:
- I ask myself what I can learn from what happened
- I think about whether I missed any warning signs
- I figure out if it was just bad luck or if I could have done something different
After my mystery box disaster, I learned to read reviews and ask questions before making money decisions kids like me should think about carefully. When my first vegetable garden failed completely, I discovered that plants need way more water than I thought!
The coolest thing is that these “failures” have actually made me better at risk management children can use in everyday life. Now I’m not scared to take risks because I know that even if things don’t work out, I’ll learn something valuable. These experiences help me make smarter choices next time, and that’s pretty awesome!
Your Journey with Smart Choices Starts Now
We covered a lot today! Understanding risk and reward is not just about money. It’s about making good choices in life.
Every day, you make choices that use these skills. This includes trying new foods and spending your allowance. It’s all about recognizing these moments and thinking smart.
My Three Question Test can help with tough choices. Remember, taking smart risks helps you grow and learn. Don’t be afraid to try new things, even if they might not work out perfectly.
These financial concepts will help you as you get older. When you make bigger money decisions, you’ll be ready. Every successful person took risks to reach their goals.
Keep practicing with small decisions now. Try new hobbies, make new friends, and learn new skills. Each choice teaches you something valuable, even if things don’t go as planned.
Your future self will thank you for these skills. Start small, think smart, and watch how these abilities help you tackle bigger challenges ahead.