In the journey of growing up, children encounter a countless number of decisions and choices that could potentially shape their future. Making the right choice isn’t always easy, and at the heart of every decision lies the concept of risk and reward. This complex behavioral economic theory plays an important role in how we navigate through our day-to-day lives, and learning to understand it is a critical part of a child’s development. The challenge, then, isn’t just about teaching this concept, but in how we translate and present it in a language a child can grasp. In our discourse, we’ll explore the concept of risk and reward, techniques for discussing this topic with age-relevant context, and how to implement practical exercises such as role-play examples that can offer a hands-on understanding of the implications of risk and reward.

Understanding Risk & Reward Concept

Understanding Risk and Reward: A Primer

The simple way to comprehend risk and reward is to equate ‘risk’ with the possibility of losing something significant, and ‘reward’ with the potential to gain something of value. This concept, while simplistic, gives a rudimentary understanding of how risk and reward function in life and economics. In the economic sense, ‘high risk, high reward’ situations are those where large profits are possible but so are significant losses. ‘Low risk, low reward’ situations, on the other hand, are those where profits are small, but losses are also unlikely or insignificant.

Why Teach Kids About Risk and Reward?

Developing a solid understanding of risk and reward can benefit children in both micro (personal finance and decision-making) and macro (understanding the economy and world events) contexts. Starting a conversation about risk and reward prepares them to make informed choices and helps them in managing their resources effectively. Importantly, it boosts their logical thinking skills and helps them develop a strategic mindset.

Steps to Discuss Risk and Reward With Kids

The first step is to illustrate the concept of risk and reward using simple real-life examples. You might use the example of going for a longer bike ride (a risk due to increased likelihood of an accident, but a reward in terms of greater experience and fun) or trying to build a tall tower of blocks (a risk of the tower falling and having to start over, but the reward of having a really cool tall tower).

Once they seem to have grasped the basic concept, introduce discussions that require weighing risks and rewards in decision-making scenarios. You can bring up scenarios such as choosing between studying for a test versus playing video games or spending money now versus saving for a larger future purchase.

To reinforce the understanding of this concept, regularly discuss recent decisions you or they made, and explain the risks and rewards you considered when making them. Remember to affirm their choices when they wisely weigh risks against rewards. By doing so, they will see the significance of this concept in everyday decision-making and will develop the habit of thinking about the potential risks and rewards before making a decision in their own lives.


Teaching kids about risk and reward is a valuable lesson that can contribute significantly to their cognitive development and personal growth. By using everyday situations to illustrate the concept, kids can have a clearer understanding of the consequences of their actions and make more informed decisions. With consistent practicing and open discussions, the concept of risk and reward can become an essential tool for kids in handling their future personal, financial, and professional decisions.

Image depicting the concept of understanding risk and reward, with a child contemplating between a safe route and a risky route, symbolizing the potential rewards and consequences.

Age-Appropriate Communication Techniques

Talking About Risk and Reward: Why It’s Important

The concept of risk and reward is crucial for the understanding of decision-making processes. This notion allows us to weigh the potential benefits of an action against the potential harm it may cause. Instilling this understanding in children from an early age can make them more self-aware and capable decision-makers.

Simplifying the Concepts

Start by simplifying the concepts of risk and reward. With younger children, it may be helpful to use a game scenario, say, pulling the bigger block from a Jenga tower offers the reward of earning points but carries the risk of toppling the tower. This tangible example makes it easier for them to understand the abstract concepts involved.

Use Everyday Examples

Using everyday life examples to explain the concept of risk and reward can be extremely effective. For example, you can discuss doing homework versus playing video games. The reward of playing games is immediate gratification and fun, but the risk is getting poor grades. On the other hand, doing homework might seem less rewarding immediately, but would lead to better grades, which have long-term benefits.

Visualize Risk and Reward

Visualization can be a powerful tool in learning new concepts, especially for younger children. Draw or find images that represent various choices and their potential risks and rewards. Encourage the child to discuss what they see and how it relates to the concept of risk and reward.

Relate to their Personal Experiences

Relating the discussion to your child’s personal experiences can further their understanding. If your child once failed a test because they chose to watch TV instead of studying, that can be used as an example of risk and reward.

Create a Safe Space for Conversation

Creating a safe and non-judgmental space for having these discussions is key. Encourage children to open up about their thought processes when making decisions, and guide them towards understanding the idea of risk and reward themselves.

Incorporate Age-Appropriate Literature

There are many age-appropriate books and stories that can help impart this concept. From classics like “The Tortoise and The Hare” to newer children’s books, literature can be a fun and effective way to discuss risk and reward with kids.

Reiterate and Practice

Like any other concept, understanding risk and reward requires time and practice. Reiterate the concepts regularly and encourage your child to identify potential risks and rewards in different situations. Through this practice, the understanding of risk and reward will become second nature to them.

Remember, your goal is not to insulate them from all risks but to help them navigate decision-making processes by weighing pros and cons, thus setting them up to make balanced, informed choices as they grow older.

A visual representation of risk and reward. It shows a scale with two sides; the left side represents risk and has a red arrow pointing downwards, while the right side represents reward and has a green arrow pointing upwards.

Practical Examples & Role-Play

Understanding Risk and Reward in Everyday Scenarios

When discussing risk and reward with kids, it’s crucial to break down the concept into relatable and understandable scenarios. For instance, you could use a situation from school where a student needs to decide between studying for an important test (the risk is spending time studying which they can’t get back, the reward is potentially getting a higher grade) or choosing to play video games instead (the risk is possibly getting a lower grade due to less preparation, the reward is immediate entertainment and satisfaction).

Relating to Popular TV Shows

Some popular kids’ shows often present scenarios that involve risk and reward. For instance, in a show like “Paw Patrol,” a character might have to decide whether to take a risk and save somebody in danger (risk being the danger involved, reward being the satisfaction and appreciation for their bravery). Encourage kids to identify such instances in their favorite shows and discuss the potential risks and rewards involved.

Role-Play for Better Understanding

Role-playing is an effective method to help kids understand risk and reward. You can create situations for the child to role-play. For example, they could pretend to be superheroes deciding whether to face the risk of battling a strong villain for the reward of saving the city. Or they could be imaginary adventurers, deciding if they should undertake a difficult journey for the chance of finding hidden treasure.

Applying Risk and Reward at Home

At home, children can be presented with choices that involve risk and reward. For instance, choosing to help with cleaning chores for the reward of extra playtime or choosing to ignore their chores for immediate gratification, yet risking losing playing privileges later.

Sports and Risk-Reward Scenarios

In sports scenarios, a player might have to choose between making a high-risk play with the potential for a big reward or taking a less risky move with a smaller reward. Consider using examples from basketball (choosing to go for the three-point shot – a higher risk but greater reward), or soccer (attempting a difficult trick to bypass opponents, risking losing possession but potentially leading to scoring a goal).

Ultimately, discussing risk and reward with kids is all about presenting relatable scenarios, and facilitating understanding via productive dialogue and engaging activities such as role-plays.

Illustration of children discussing risk and rewards in different scenarios

Equipping children with the understanding of risk and reward not only aids them in becoming capable decision-makers but also prepares them to face challenging situations with a problem-solving mindset. Simplifying complex ideas and presenting them in an age-fitting context plays an essential role in this educational process. This is coupled with the implementation of practical examples and role-plays that embody the very essence of these concepts, making them tangible to a child’s imaginative and impressionable mind. The goal is not to shield them from the reality of risks but to furnish them with the tools to weigh them against possible rewards, thereby creating a generation of calculated risk-takers, who, equipped with this knowledge, stride into the world with confidence and adaptability.