How many times have we heard “But I need it!” — coupled with a pout — from our kids?
Probably too many. None of us want to raise a child who could give Veruca Salt a run for her money. So, understanding the difference between a need and a want is so much more than just making sure that you don't raise a spoiled brat. It’s fundamental to raising money-savvy kids – ones who will go on to become money-savvy adults.
The difference between a need and a want
When you get down to brass tacks, “needs” are those items that are essential in our day-to-day life. Things like shelter, enough food to eat (and no, we’re not talking about a box of chocolate-flavoured cereal) and clothing. Wants are those nice-to-have items. The indulgences that bring us pleasure, like a double ice cream cone or yet another new stuffy. But hey, they’ll live without it.
Few, if any of us, are born with an innate ability to tell the difference between a want and a need. It’s even harder when kids see their friends with the latest toy and decide they need that too. Understanding a need vs. want is something we can teach our kids, so they can begin to tell the difference at an early age.
Why is it important to understand the difference between a need vs. want?
You’ve probably heard of the “marshmallow test.” Pioneered by Stanford University in the 1970s, it set out to study delayed gratification in children. If kids are able to distinguish between a genuine need vs. something they want, they’ll be able to choose whether they want to delay that immediate gratification (one marshmallow) for a long term reward (two marshmallows). Only instead of marshmallows or that new computer game, your child can keep their cash in their back pocket and save for a big-ticket item they really want.
Understanding the difference between a need and a want is also the beginning of building strong values around finances early in life. It’s the foundation for developing a budget when they’re older and realizing that paying rent is a higher priority than an all-inclusive vacation with friends. They’ll also have the skills and experience to know how to save for that vacation while paying the bills each month.
5 ways to teach the difference between a need vs. a want
Here are some suggestions on activities you can do with your kids and tips to help teach the difference between a want and a need.
1. Use pretend money to teach them the value of a dollar
Break out that game of Monopoly gathering dust in the basement and hand your child some play money. Walk them through a monthly budget, starting with needs – like rent or mortgage, hydro bills, car payments, WiFi, and basic groceries – and allocate a cost. Have children “spend” their bills each of these items. How much is left over? Open up a conversation and ask them what they’d choose to spend the remainder of the money on. Have your kids see how far their money would go once the necessities are covered.
2. Get crafty with visual learning
If you’ve got magazines or flyers on hand, grab a pair of scissors and have your kids start cutting out images of things they think people either want or need in their lives. Ask them to talk through each choice and paste the image onto a poster in two separate categories. Alternatively, select images from the internet and create an online poster for the activity.
3. Shop together using shopping lists
Have your kids help you write a list of grocery items you need to buy – essentials like toilet paper, milk, or fruit and vegetables. Then, at the supermarket, ask them to stick to the list. If your child spots a box of cookies or a family-sized bag of chips, challenge them on whether it’s an item they need or want? Look at the price and start up a conversation about whether it’s worth the cost.
4. Be a role model
You can talk the talk, but can you walk the walk? Let your kids know that you also have wants, and tell them about the times you chose not to buy those items. None of us are perfect, so if you do drop some cash on a designer pair of jeans that you didn’t really need, fess up. Share how you felt about the decision and what you could have done with the money instead.
5. Empower your kids
Consider taking responsibility for providing your children’s needs, such as hair cuts or school shoes, but give them autonomy to purchase their own wants. This not only breaks the cycle of kids constantly asking the Bank of Mom and Dad to fund their LEGO collection but gives them an opportunity to practice managing their own money. Using a tool like the Mydoh debit card makes it even easier. Parents can set up a weekly allowance, as well as see your kids’ spending activity.
Give your kids the tools to succeed
Teaching the difference between needs vs. wants is one thing, but putting it into practice is another. Whether you prefer cash or a card, letting your child pay for some of their own needs and wants gives them practice when they’re young, and empower them to take charge of their finances as they move through life. Best of all, you can use Mydoh as a way to make those purchases safely and securely.
This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.