The initial step in a goods and services lesson is to describe the differences between goods and services. For first graders this can be done by writing the words "goods" and "services" on the blackboard. Give them a basic understanding by citing examples -- bread is a good while going to the doctor's office is a service. Then ask them to help you come up with as many goods and services as possible. Write them on the board underneath the correct term.
Introduce the idea of customers and providers and make sure to point out that all people can be both buyers and sellers of goods and services. In the first grade classroom a teacher can identify herself as a service provider. She gets paid to teach the kids things like this lesson. In this way she is a seller of her services. She uses money that she earns from her service to purchase goods and services from other people. This is the opportune time to explain how money works.
Most first graders have been told they can't have something, but really don't understand why they can't have everything they want. This is because money has always been an abstract idea to them. Now that they have a more concrete understanding of money as a way to trade for goods or services it's time to explain that people have to make choices on what they purchase based on the amount of money they have.
Use this as an opportunity to do a math worksheet about how much money is needed to buy certain things. Then do some real life role play with the students. Have them buy a few items from a mock store. For example, give a student a round piece of paper with "25 cents" written on it. Tell him that there are three items he can buy, a pencil for 20 cents, a piece of gum for 15 cents and an eraser for 5 cents. Walk through the different options for his purchase.
Following the example in Section 3, you can now explain the difference between needs and wants. Ask the students which of the items at the store (the pencil, gum and eraser) are needed to do their schoolwork. A more detailed explanation can be made by asking the kids which of the items that were put up on the board in the goods and services section are needs and which ones are wants.
The final concept, saving money, is the hardest one to get kids to understand. The best way to teach this is to use a "classroom store" where the kids can earn points (equivalent to money) for good behavior. Have items in the store that cost different amounts of points and show them how saving their points for a certain number of days will allow them to get some of the bigger items in the store. Items can be pencils and erasers, stickers, notebooks, etc.