Educating Kids about the Differences of Needs vs. Wants
Teaching your children the difference between a need and a want will help them when it comes to budgeting and saving for their future goals. It will teach them to understand purchases that are necessary for a household’s function versus buying items that are really just a desire.
Here are 3 tips to help your youngster understand the difference between and a want:
1. What's the Difference? – Make a list of all the things your child says he/she needs. Ask your child to circle the items they feel are needs and underline the items that are wants. Explain to them that a need is an item essential to survive (like food), whereas a want is simply a wish (or an item we desire but don't need to survive).
2. Give them the Opportunity to Earn an Allowance – This is a great way to introduce important money lessons. For example, performing a chore in exchange for an allowance teaches them basic lessons in wages and earning money. It's important they learn that money is earned and doesn't magically come from an ATM!
3. Create a Budget - Give your child a set amount (for example $10) to spend on something they want. During your next trip to the store, explain they can purchase something they want, but cannot exceed their $10 budget. Practice a few math problems with them like buying five items for $2 each, two items for $5 each, or one item for $10. This exercise teaches them about making choices and emphasizes the dollar value that items have.
Give your child a head start in practicing good financial habits by teaching them early on. For more fun ways to learn about money check out our FREE Smart Savings Kid’s club.