3 minute read
Explaining to Kids About Want vs. Need
Learning the basic difference between want and need is a skill your child will carry into adulthood.
- Use everyday activities to teach money lessons
- Use the Family Money Vault to help kids save
- Demonstrate how the family maintains a budget
Teaching your kids how to use money wisely helps them take the first step on the path to financial literacy.
Goals, wants and needs
Invest the time to talk with your child about money on a regular basis. Children are generally developmentally capable of saving at a very young age. Make the lessons short and fun. What do your kids really want? What do they actually need? August is National Back to School Month, so let’s use a trip to get school clothes as an opportunity to teach money lessons. Help the kids create a detailed shopping list of everything they need for the start of school. As you walk down the aisles selecting items, ask your child if each item is a need or a want.
If something is on the list, it’s a need; if it’s not, it’s a want. For example, perhaps a new backpack is on the list, so that’s considered a need. However, new designer sneakers are not on the list, so that’s a want. Imagine there is a big sale on sneakers as part of a back to school promotion. What would you need to cross off the list to buy the footwear? Would the child be willing to buy a less expensive backpack? Perhaps they are willing to take on more chores to cover the purchase? This type of discussion teaches your child how to make sacrifices (or save money) to purchase the things they want, or how to work that special item into a budget. Using an everyday example of how money is budgeted and accounted for is a fun way to introduce the idea of working within a budget.
Work, money, and motivation
To motivate a child to save, kids must understand the relationship between work and money. Allowances may be a starting point, but any work done outside the normal household tasks could be an opportunity for a child to earn additional money. If a child wants to buy a special toy or expensive new footwear, that may be something they purchase with their own money. If new designer sneakers cost $150.00, it becomes clear how much kids must earn to reach that goal. Learn how to transfer money from the Vault to your kid’s Spend Card here in our FAQs.
The Family Money App can help parents transfer money into savings (Vault) and spending (Card). Each time Mom or Dad moves money from the Wallet to the Spend Card or Vault, kids can watch their balance grow. Remind the kids in order to spend what is saved in the Vault, they must move the money to the Spend Card to make a purchase.
Educating your kids about want vs need is a logical first step and giving them some autonomy to make purchases will reinforce the concept. Using the Family Money App helps break the habit of constantly going to the Bank of Mom and Dad. It provides children an opportunity to practice managing their own money, while Mom and Dad gain the benefit of reviewing every purchase.
Encourage your kids to practice managing their own money. Try Family Money on us for 30 days*
*Monthly fee charged thereafter unless you cancel before the trial ends.