Need a few ideas how to teach your kids about money? Learning about money management is literally a life-long process and sharing that journey can be informative and fun! Here is one important concept to raise a money-wise child:
Needs versus Wants
Life is about making choices. Teaching your son or daughter on how to choose on where to spend his or her money is an extremely important life lesson. Both needs and wants require money. Needs are what we spend money on to survive, and don’t typically change over time. Wants are what we spend money on, items or services which may or may not be good for us but are not essential for survival. Wants can change over time.
The bottom triangle illustrates the items that we need to support of our daily lives. Explain to your child that you need food/water to sustain the body to survive, clothes to protect our body from the outside weather elements, a home to live in and some means of transportation, and bills to pay such as utilities and groceries, for example If these needs are not met, we can experience distress, even become ill or die.
The top triangle illustrates the items that we may want to make us happy and be fulfilled—soda pop, candy, videos, toys and vacations, etc. These wants may be great, but we don’t need them to keep us alive and well. If our wants are not fulfilled, we may be disappointed, but it does not result in illness or death.
Ask you child to identify each item on the following list as a “NEED” or a WANT.” His or her answers may surprise you!
1) Tickets to your favorite sports team. Answer: WANT
2) Milk, cereal and fruit. Answer: NEED
3) Doctor visit after you broke your leg. Answer: NEED
4) A new toy. Answer: WANT
5) A new TV when you already have one that works. Answer: WANT
Life Lesson: If there no money left after needs are taken care of, then the list of wants will have to wait!