Profit and loss is the first and the most important concept when it comes to learning about money and money management. A profound understanding of this concept helps to make informed decisions, be it anything in daily life.
Early exposure to the concepts of profit and loss aids in the development of vital life skills such as critical thinking, problem-solving, and analytical thinking skills. Since the subject is challenging, conventional teaching methods may not always be sufficient in order to completely understand and apply in real terms. In such cases, including creative activities exposes them to how profit and loss work in real-time, fostering a solid foundation for much-advanced money concepts.
Addressing the cruciality of the subject matter, in this blog post, you’ll find innovative activities that can be incorporated into the profit and loss lesson plan to encourage them to learn, understand, and even manage finances in a creative manner.
Innovative activities to teach profit and loss to students
Dealing with concepts like profit and loss require students to use problem-solving skills, such as calculating costs, setting prices, and analyzing data. Below mentioned activities can spark curiosity and encourage students to learn, enquire and achieve practical knowledge.
1. I’m the Store Keeper
Entrepreneurship for kids comes with a lot of benefits equipping them with the essential basic knowledge of money, profit, and losses, and the world of business. This activity focuses on lively counters where students can learn and practice these crucial skills.
Instructions:
- Arrange different tables in the play area
- Ask students to select the products they want to sell on the stall
- Now, ask them to decide the cost price and selling price for the same
- Make sure to distribute fake currency notes to all students
- Now, give shopping time to students in batches. Encourage them to negotiate the pricing and get yourself a better deal.
- After this, each student should calculate how many products they have sold and what is the profit or loss.
Encourage and help them to find the profit by applying the formula of subtracting the cost price from the selling price to get the profit amount. You can then discuss their experience too.
2. What Falls Where?
At times, students are confused if a certain financial transaction is a profit, loss, or none. It helps them understand finance in a more comprehensive manner.
Instructions:
- Ask students to make different placards and write profit, loss, and none on 3 different placards
- Now, give different statements and ask students to raise the placard that fits into it
- These could be the following statements
- Mother is shopping at a supermarket sale
- Sharon is not able to find $10 since the time she is playing in the garden
- Paul received an appreciation letter and $20 as his gift
- As students raise their placards, you get an opportunity to assess their understanding and rectify them wherever needed
Financial literacy can be achieved when students are able to differentiate between profits and losses in everyday transactions, and for which educators can also check financial literacy activities for more practice and active participation
3. Jump or Not?
Exposing students to real-life problems in a creative format can give them a better idea about money-related activities. This activity can be incorporated in a way that builds literacy and clarifies doubt.
Instructions:
- Ask students to stand at the end of the classroom
- Start reading a scenario and ask students to analyze if it is a profit or loss
- If it is a profitable deal, students need to move 2 steps forward
- Similarly, if the statement indicates loss, they need to move 1 step backward
- If a student answers wrongly, he/she needs to step 3 steps back
- The activity goes on till everyone has participated in it
The creative format of this activity works on actively engaging the students and fostering the optimal learning environment. It allows them to explore the subject, think critically and raise possible queries while jumping.
4. Save the Maximum!
Learning and effectively doing money management is the need of the hour not only for adults but also for students and this activity focuses on offering an opportunity to learn in realistic situations.
Instructions:
- Make a team of 4 students each
- Ask them to contribute $25 dollars each making it a total of $100
- Now, the task is to make a food dish in the classroom that requires basic ingredients
- The team needs to plan for the dish, buy ingredients from $100 and make a tasty dish
- They can plan to make a sandwich, any snack, or a ready to make and eat dessert
- After this, they are supposed to tell how they distributed the money, bought the best ingredients for minimum money, and their experience with shopping
The challenge here is to go together and find ingredients in a creative manner. The activity is a combination of critical thinking, analysis of budget, and uniqueness in ideation.
5. Read the Bar Chart
The finance industry is vast and various graphical methods are used to represent data. It is crucial for students to learn about the basic charts and interpret their findings.
Instructions:
- Present the bar chart of a company that sells different products
- For example, the five different products can be books, color boxes, pencils, compass, and geometry box
- Now, show the sales in the form of a bar with reference to each product
- Allow students time to understand how different products made the highest profit in a particular financial year
- Invite an open discussion from everyone about this
Bar charts offer a great way of representing data and that is how students can learn more about the profits or losses of a company. For more practice, bar chart online games can be employed. These help them read data in an interesting visual format.
6. Make your Pie Chart
Every student is likely to get certain pocket money or any other form of money from sources like parents or relatives. This activity is all about analyzing and managing their money by making their own pie chart to evaluate profits or losses.
Instructions:
- Ask students to take a base figure of $100 as their pocket money
- Now, depending on their spending, ask them to divide the pie chart
- For example, if they spend $30 on games and $10 on stationary, they need to give more space to games and less to stationary in the pie chart
- Ask them to draft everything in a precise manner including every spending.
- Now, ask them to talk about the amount they put into savings and how certain spendings are profitable for them while others have been a loss
This activity not only highlights profits and losses but also helps them reflect on their everyday spending. It helps them understand the usage of pie charts with reference to understanding money.
7. Profit and Loss Cards
We use “profit” and “loss” terms not just for finance but also for other normal situations where we experience them. For instance, if you solved a normal problem from daily life, then this is a profit for you as you gained confidence for that particular task and learned something new. So, this activity is generally to equip students to understand these terms in general.
Instructions:
- Make 3 cards and write “profit” on it and similarly, make 3 cards of loss
- There is no certain number; the cards should just be labeled as profit and loss
- Now, explain students that they need to reward these cards to each other as a result of any kind of their good or bad behavior towards you. For example, if Peter helps Jessica in her homework, Jessica can give the profit card to Peter. Similarly, if a student accidently hurts the other student, he/she may give the loss card to them as their act of carelessness.
- Let the activity go on for the day and invite an open discussion at the end. Ask every students to calculate their profit cards and loss cards and then calculate whether it was the overall profit for them or not
Here, students do not simply talk about profits or losses but actually get an opportunity to understand each other. Such an activity offers deeper understanding as everything is felt, exchanged and noted.
8. Are you Smart?
Profit and loss should be explained in a broader way which is not limited to financial literacy. This activity fosters deeper understanding of the terms in various aspects of life.
Instructions:
- Print different pictures on a sheet of paper that lead to profit or loss
- For example, the pictures can have a boy eating junk food or a girl cycling
- Now, have such 15-20 pictures and give two different colored sketch pens to students
- As per their understanding, they need to circle the pictures with green if they think, it is a profit
- Similarly, they need to circle it red if they link it is a loss
- For example, eating junk food leads to loss of health and cycling leads to profit/gain of a healthy lifestyle
- Invite an open discussion after the activity
When students are taught profit and loss in a creative way, they are more likely to understand how these terms surround them everywhere. It is always a good idea to incorporate an activity that creates relatability in everyday life.
9. Report Time!
Profit and loss can be better understood with practical application of inventory management and costs involved. This activity focuses on communication with different working professionals to understanding profits and losses.
Instructions:
- Ask students to strike a conversation with any shopkeeper
- Ask students to get details about a particular product and understand its complete cycle from raw materials used to getting it packed for sale.
- Apart from this, ask them to get details about stock, sales and the month-end profit from the shopkeeper
- Students can take any product including a biscuit, a perfume, or a snack packet to gain insights about the same
- Invite an open discussion after this to evaluate understanding
The activity helps them with the art of communication and general financial techniques that are employed to maximize the profit. It helps them develop a better understanding of the concept too.
10. Visit to Supermarket
Supermarkets are all about prices, deals, and discounts. With multiple brands and different discount options, students can get an opportunity to learn a lot about profit margins of a product.
Instructions:
- Ask students to visit the supermarket
- Let them choose any 5 products for the activity
- They need to the note the names, retail prices and the discounts offered for each product
- Now, ask them to understand the retail price and discounted price to arrive at the profits made
- For example, they need to state if a certain product was priced at $50 with 10% discount then the purchase price was $45
- Similarly, if other products was priced at $50 with 20% discount then the purchase price was $40
- This way the second product was more profitable with a higher discount percentage
Such an activity allows students to fully focus on how different products and prices work in a huge supermarket. They are more likely to understand the discount system and even learn to calculate the final pricing.
Does understanding of P&L help with financial literacy?
Financial literacy is a significant part of everyday life and for everyone. Learning about money helps to build strong foundational skills towards spending and saving thereby creating a balance. Check how the ground level understanding can build financially educated individuals for the future.
- When students understand the major difference between profit or loss, they are more likely to understand the difference between needs and wants.
- The understanding also helps them make wiser decisions in shopping and everyday transactions.
- They are more likely to explore the topic with parents and teachers as profit and loss elements enable them to understand aspects about investing, saving, and spending wisely.
- It also enables them to learn about different ways to represent financial data thereby building the ability to read charts and graphs.
- Understanding of profit and loss strengthens their relationship with numbers thereby making them more practical in their approach.
Wrapping up
Profit and loss activities are an important tool for helping students develop practical skills and knowledge that can benefit them in many areas of life. By engaging in these activities, students can develop problem-solving, teamwork, creativity, and critical thinking skills. They also get an opportunity to learn about important concepts related to personal finance, business, and entrepreneurship. It is important to note that every student learns at a different pace and teachers should keep them engaged in various innovative ways.
An engineer, Maths expert, Online Tutor and animal rights activist. In more than 5+ years of my online teaching experience, I closely worked with many students struggling with dyscalculia and dyslexia. With the years passing, I learned that not much effort being put into the awareness of this learning disorder. Students with dyscalculia often misunderstood for having just a simple math fear. This is still an underresearched and understudied subject. I am also the founder of Smartynote -‘The notepad app for dyslexia’,