Money-Smart Kids: Wants vs. Needs

n“Daddy, Daddy, Daddy. I need to have the Millennium Falcon Star Wars Space Ship. Please, please, please. I really need it.”

Taken literally, someone new to the planet would understand my son’s “need” as potentially life threatening if he were to go another hour without this space ship. As any parent knows too well, this is just my son using the word “need” when he really means to be saying “want.” It’s quite easy for a 5 year old (and a twenty-five year old for that matter), to be confused with their “needs” and “wants.” In an effort to avoid our children growing to be twenty-five and still making this mistake, let’s have a quick tutorial.

Our children seem to think that they should have everything that we (as parents) have, ignoring the fact that many our possessions have been accumulated over years. A need is something you have to have, something you cannot do without; a good example is food. Needs are things that we truly cannot be without: n
- Food
- Shelte
- Clothing

A want is something you would like to have. It is not absolutely necessary, but it would be a nice thing to have. A good example is music. Wants are things you would like to have, but if you don't, you will still survive (In fact, you will be just fine) like: n
- Toys
- Candy
- Video games
- A skate board n
Some categories are both needs and wants. For example, what category do books fall under? Here’s the litmus test: can I live without it? If yes, then it’s a want. It’s complicated with some issues. Do I need a house? I certainly want one... But is it a true need? If I wouldn't be happy without something, wouldn't that make it a need?

When trying to figure out your own needs and wants, ask yourself the following questions: n
• What items do I need in order to get ready in the morning? Maybe a toothbrush, towel, shampoo and/or a hair dryer.
• How about my clothes? Do I need shoes, socks, pants, and a sweater?
• How do I get to school? Do I need bus fare, a bike, skateboard, or good walking shoes?
• Are there things I need for school? Books? Backpack? Binders? Pencils?
• How about things to help me study? Do I need a desk, chair and/or computer?
• Do I have any sports or hobbies that need equipment? Like tennis racquet, cleats, riding gear, or something else?

Only you can decide what is important for you to own. When you get older, having more “stuff” just gives you more to worry about (things break and things are stolen). It is more work having to keep things clean. You learn when you are older to choose your things more carefully. n
Decide what you need to make you comfortable. Learn to distinguish between your "wants" and "needs". Don't be so strict that you'll take all of the fun out of life. Everyone should have things that they just love, even if they are not practical. Just try and develop simple tastes. When you and your family agree with wants and needs in a budget, daily chores become easier, not to mention removing a source of stress. These simple steps will allow for the occasional indulgences while remaining focused on the long-term financial goals. Living well for less has never been so simple.

Exercises for developing the concept of NEEDS vs. WANTS

• AGES 5-8nn o Place a collection of items on the table: toothbrush, milk, chewing gum, mittens, etc. Have you kids separate into two piles - one for things that they need the other for wants. Talk about how wants and needs affect family life. n n o Give kids piles of magazines and two large pieces of poster board. Let them create two posters - one of needs and the other of wants.

• AGES 9-12nn o You and your children can make separate lists of those items that each of you need. Discuss the similarities and differences between those of their parents and grandparents.n o Research the differences between wants of children in this country versus those of others throughout the world.

• AGES 13-15nn o Get beyond their needs equals good, wants equals bad. Ask kids to distinguish between reasonable wants (I want to learn to dance), and indulgent wants (I want to rent a movie every day). You can do this as a regular exercise when driving in the car. n o A great exercise is going through the monthly budget of the household and dividing things into needs versus wants, and then on the needs, breaking it down to; is it the lowest cost option. n o Kids and money. Where do you spend money? What you spend money on depends on your values. Values are feelings about what is important to you. n o Sometimes wants do become needs. If you live out of town and play on a ball team, a bicycle could be a need. A pair of good basketball shoes for those participating in a basketball also could become a need. But the example I always use with basketball sneakers is; do you need Air Jordan basketball sneakers, or are there regular pairs okay. n o Show me someone's credit card bill and I'll tell you what's important to them.

Notes:

• Wants versus needs stems from not understanding money priorities.
• This may be a great opportunity to bring in “Save, Spend, Donate and Invest” as a way to help determine priorities. Once parents have taught those lessons, wants versus needs and “my money” versus “your money” also becomes clearer.
• Teaching these four doctrines starts with allowance and “practice money.” Once the doctrines are set, then the priorities are set and the “my money” versus “your money” should never come up.
• Wants versus needs, then, becomes an easier subject to cover as a reminder rather than a lesson to be taught from scratch.

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