Understanding the difference between Needs and Wants is crucial to managing money. When given extreme examples, children can easily distinguish between a ‘Need’ and a ‘Want’. For example, children know they need food but they want toys. At these extreme ends of the spectrum is easy. It becomes blurred when we start moving into the middle ground – a ‘need’ may in fact, be a ‘want’. Take for example a digital TV. Today, a TV is considered a ‘Need’ in many households in the developed world. However, only a few decades ago, the TV is a ‘want’.
How to start money conversation around Needs and Wants?
Here are 3 questions you can ask your children to start a conversation around Needs and Wants:
- Do you know the difference between a Need and a Want?
- Give me 1 example of what you think is a ‘Need’ and 1 example of what you think is a ‘Want’.
- Why have you put these items in the ‘Need’ category and the other items in the ‘Want’ category?
When asking these questions, see if you can get them to generalise their answer into guiding principles.
Things around the home – Needs or Wants?
Once they have their ‘guiding principle’ list some of the things your family use in one day. Then ask your children to do the following:
- Put the list of things into ‘Need’ and ‘Want’ using your guiding principle.
- Using your guiding principle, explain why you have placed the items in the Need or Want category.
- Choose a few items from the ‘Want’ category and ask your children if these could ever be a ‘Need’. Give them various scenarios to work through to analyse whether the ‘Want’ can ever turn into a ‘Need’ in certain circumstances.
- Do the same for the ‘Need’ category to see if some of those things can become a ‘want’ in certain circumstances. Ask the children probing questions to get them to think about the categories they have chosen.
- Ask your children whether money itself is a ‘Need’ or a ‘Want’ and work through “Why” in their answers.
Finally, help your children summarise the guideline they will use in the future when working out whether an item is a ‘Need’ or a ‘Want’. Write this down somewhere and use it often whenever there is an opportunity to talk about Needs and Wants.
When you perform this exercise with your children, were there items that your child has identified as a Need but you thought is a Want? Where there items your child has identified as a Want but you thought was a Need? Share with us in the comment section.