🌍 Social StudiesGrade 3Lesson 27
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How Money Flows
Lesson preview: the Mini Lesson and Vocabulary are open to everyone. Guided practice, exercises, the parent checklist and the printable PDF worksheet come with full access (free 7-day trial or membership).
Learning Objectives
- 1Name the four steps of the money-flow cycle
- 2Place the four steps in the correct order
- 3Explain how spending passes money from one person to another
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Mini Lesson
Money doesn't just sit still — it flows through communities like water through a river. When people work, earn, spend, and save, money circulates and keeps the economy healthy.
Step 1 — Produce a good or service
- Someone uses their skills, time, or materials to create something of value.
- Example: A baker wakes up early and bakes dozens of fresh loaves of bread.
Step 2 — Earn money
- The producer sells their good or service and receives payment.
- Example: Customers buy the bread and the baker earns money from the sales.
Step 3 — Spend or save
- The earner decides what to do with their money: spend it on goods and services they need, or save it for future use.
- Example: The baker uses the earnings to buy flour from the mill and saves some for a rainy day.
Step 4 — Money circulates
- Money that was spent passes to another producer, who then earns, spends, and saves — and the cycle continues throughout the community.
- Example: The miller who sold flour now has money to pay their workers, who then spend at local shops.
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Ask yourself: "Can you trace one dollar from a farmer, through a baker, to a family, and back again? Who else does the money reach along the way?"
Vocabulary
Money
What people use to pay for goods and services they need or wante.g. We use money to buy groceries, pay for the bus, and save for the future.
Earn
To receive money by producing or selling a good or servicee.g. A baker earns money when customers pay for fresh bread.
Spend
To use money to buy a good or servicee.g. Our family spends money at the grocery store every week.
Save
To set money aside for a future need instead of spending it nowe.g. Saving a little each month helps pay for a bigger purchase later.
Circulate
To keep moving from person to person — as money does when people spend and earne.g. When the baker pays the miller, money circulates through the community.
Economy
The system of producing, buying, and selling goods and services in a placee.g. A healthy economy has money moving through many hands each day.
Income
The money a person earns for their worke.g. A nurse receives income from the hospital for caring for patients.
Payment
The money given in exchange for a good or servicee.g. The customer handed the baker a payment for the loaf of bread.
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