Classroom Perspectives, Financial Literacy

The Classroom Economy: Teaching Fourth Graders about Inflation

The Classroom Economy: Teaching Fourth Graders about Inflation

Originally published April 2023

By Lauren Almond

At the school in Philadelphia where I teach, we have a very robust classroom economy. My students are required to pay “rent” on their chairs, which is due on the first Friday of the month.

Unfortunately, I have some bad news for my fourth-grade students: thanks to inflation, which is causing prices to skyrocket across the country, their rent is about to increase from $5 to $7 a month. It seems only fair, since across the U.S., the average rent is up 12.3% over February 2020.

The dollars themselves might be fake, but the lessons they teach are very real: ways to manage money and keep track of a budget, how to decide whether and when to buy something, what it feels like when inflation suddenly makes daily life more expensive, and how to minimize the impact of these unexpected costs.

Over the years, I’ve found one of the best ways to help kids understand the value of money and how an economy works is to have them take an active role in managing their own money. These are lessons they will continue to leverage into adulthood. More than a third of millennials say they’re behind in their retirement savings, and that can have long-lasting repercussions.

What’s in our wallets?

I kick off the classroom economy each year by having students make their own duct tape wallets, where they keep the play money that is used as currency in our classroom. Throughout the year, the students keep a ledger of their income and expenses.

Aside from their “rent,” students must pay fines if they haven’t completed their homework, or if they have a messy desk. But there are plenty of ways for them to make money as well. Each week, I hire two “employees,” who are responsible for a list of chores the class has decided on together. Students also get a bonus on their birthday, $1 for every homework assignment they complete, and $1 for wearing white on Fridays (a school tradition).

Once a month I even choose a “celebrity student.” That student takes home an Oscar and celebrates their celebrity status in any number of creative ways. After their spin in the spotlight, if they write about their experience, they get a celebrity-sized paycheque that week to match.


We also have monthly sales, during which kids bring in items from home that they no longer want, or make homemade keepsakes like bracelets and bookmarks, and set prices to sell these items to their classmates. One year, an enterprising student made a killing offering glitter tattoos for $15 a pop.

That student was less thrilled when Tax Day rolled around on April 15, and I separated the class into tax brackets based on the amount of money they had. Every student is different; some of them hoard their money, and some of them spend it. If they’re in the highest tax bracket, and they have to pay a lot of taxes, they might get a little upset. But it also sparks a great discussion about equality and responsibility.

Lessons not just for math class

The idea for the classroom economy originated in our school’s third-grade curriculum, when the students read The Lemonade War by Jacqueline Davies, and ran their own lemonade stand. The next year, I decided to build on those concepts by implementing an economy inside the fourth-grade class.

Since then, I’ve found many new ways to make our classroom economy more relevant to both real life and the other subjects I teach. For example, when we learned about the Stamp Act of 1765 in social studies class, I began charging students for stamps to put on all of their papers, with proceeds going back to King George of England. This had the added benefit of helping students to understand how the colonists felt—angry at wasting their hard-earned cash on a far-away king!

A penny saved is less than a penny earned during inflation

Right now, the U.S. is experiencing record inflation, with an 8.4% increase in September 2022 compared to the previous year. Inflation is a really hard concept for most adults to understand, so just imagine how challenging it is to teach this economic reality to fourth graders.

When I tell students that rent is going to go up because of inflation, they’ll probably be mad. This abstract concept suddenly becomes a lot more personal, because this is money they’ve “worked” to earn. But they will also ask good questions while they are trying to understand.

And at the end of the day, that’s the whole purpose of this experiment. It’s not about which student ends the year with a duct tape wallet stuffed to the brim with the most “dollars.” It’s about helping my students understand the value of money. And if our classroom economy can do that, well, then that’s priceless.

Lauren Almond is a fourth-grade teacher at Perelman Jewish Day School.