Teaching Needs vs Wants

Every day you see the needs of your children and do your best to give them what they want. But, sometimes that’s not possible. Has your child ever asked for an extremely expensive gift they’re not even old enough to use yet? Well, that’s because they don’t understand needs versus wants just yet.

As they grow older, you can slowly teach them the difference. Start early to help them decide what to spend money on and when they shouldn’t.

 

1. Teach them about the concept of money

Have you had this conversation?

“How much does it cost?” Your child asks.
“At least $150!”
“So, can I have $150?” They respond looking at you expectantly.

Don’t worry, it’s not that they’re greedy, they just don’t understand the concept of money. They see each purchase as the same … usually a swipe of a plastic card.

So, now is the time to start showing them where money comes from, what it’s used for and its limitations. Money is so ingrained in our culture and everyday life that it can be hard to really explain such a seemingly simple concept.

Of course, the simplest way to teach them is to show them actual cash. But, when you use your credit card or debit card, show them the amount you’re spending on the receipt. Then, remind them of the cash that was taken from your bank account when you made that purchase.

As you continue to do this you might ask them questions. Here are a few examples:

• “The total is $25. How many $5 bills do I need to pay this?”
• “I have $30. Can you add up the prices of everything in the cart to see if we have enough?”
• “We only have $200 for the month to spend on going out to eat. How much do you think this restaurant will cost our family?”

 

2. Start showing them the varying costs of different items.

Kids are trying to understand the differences in everything they see and do. So, show them the difference in cost.

Do they like going to the movie? Show them your budget for entertainment. Then show them the cost of an early bird ticket versus an after-dinner ticket. Let them do the math. They’ll quickly discover they may be able to see more movies if they choose the earlier show time.

Or, while you’re looking at prices at the grocery, mention how those prices compare to the cost of a tank of gas or your electric bill.

Here are some other great ideas for finding teachable money moments!

 

3. Allow them to identify things you’re buying as needs or wants.

You’re busy and probably just want to get in and get out of the mall or grocery store. But, this can also be a great time for a lesson on needs versus wants.

When you’re buying clothes for your kids or even for yourself, talk about the things you need and then identify the things you’re buying that are just wants.

Ask them about things in your cart. Which things does your family need and which things in the cart are just wants? They may see cookies and ice cream as needs, when that’s not the case.

To make the exercise effective, make sure they know the definitions of both. That will make it easier for you to explain as you walk through the store.

Here are some simple definitions to help them understand:

• Need:Something you cannot live without. Usually something you use every day. This includes things like water, food, shelter.
• Want:Something that makes you happy, but you can live without.

 

4. Create a wish list, listing out needs and wants for the coming month.

If you’re getting ready for a birthday or holiday, this is a great exercise! Have your kids create a wish list filled with things they need for the upcoming month and things they want.

After they’ve created the list, help them identify some other items they may need that they forgot to add. Then, help them find prices to each of the items.

This will help them understand the cost of their wants and their needs. You can even take it a step further and give them a budget for the month. Ask them what they will spend the money on, but tell them you will have the final say. Especially if you’re discussing this with your pre-teen or teen, here’s a great article on how to make sure they don’t treat you like a bank.

The role of a parent is difficult because you want to give your kids their hearts’ desires! But, you also want to set them up to Prosper down the road.

Help them understand that money should be spent on needs first, and what is left over can be used for some wants. But, as you talk, don’t neglect to teach them about saving money, too! Here’s a great resource to help you with that discussion.