Sunday, 19 May 2013

Where does the money come from or how businesses make money?

An interesting conversation you can have with kids or anyone for that matter is when you're talking about a company or business....where does their money comes from and how do they make money/profit?

A lot of times kids don't really understand this but talking about it with them is a great way to enhance their financial literacy and really just part of learning how the world works.  Kids using technology especially become isolated from a lot of this because a lot of things seem "free" to them.

I started thinking about this after having a conversation with my son about "monetizing" his youtube videos.  He has been quite active for a long time creating and posting youtube videos so this prompted us to talk about if he makes some money doing this, how does youtube make money.   Basically, he figured out that advertisers pay youtube fees to post their ads on videos and they share a slice of the money with him. Before I asked the question he hadn't really thought about it.

Here are some examples of companies/businesses you can talk about - Grocery stores, Car manufacturers, Car dealers, Cell Phone companies, Banks.  All of them have different business models and it is interesting how they make money.    For example, many car manufacturers don't make most of their money from making cars but from financing people buying cars.

Examples are all around us.  See if you can come up with any to discuss with your kids or students.

James Whelan,