How to Teach Your Kids the Difference Between Wants and Needs

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As parents, we all want to make our children happy—we want them to have that coveted toy or the next fun experience. But there are always going to be times when your children want something that doesn’t fit into the family budget; a pricy new video game, an expensive summer camp, or a trendy piece of clothing is not always going to be possible. When that happens, though, it’s an opportunity for you to talk with your kids about the realities of money, which includes making the distinction between something we want versus something we need.

As much as they may want a new toy, game, or trip to the amusement park, understanding how money first must pay paying for our basic needs, such as food, shelter, and clothing, versus the optional wants is an important step kids can take toward financial literacy.

How to talk to kids about money 

When it comes to talking about the ubaffordability of some of their wants, “it’s important to be direct, but confident and assuring,” said Eric Storch, a professor of psychology at Baylor College of Medicine. He suggests leading with empathy, acknowledging their desire, while finding age-appropriate ways to help them understand why they might not be getting what they want.

“Your response can vary as a function of age and maturity,” Storch said. With a young one, he recommends acknowledging their wants with an empathetic response, and then pivoting. With older kids, he recommends a more detailed discussion, one that acknowledges the family budget, and then helps them brainstorm financially feasible ways of satisfying their wants.

To help your kids begin to understand the value of money, Storch suggests using prompts that can help make the concept tangible, such as tokens, buttons, or beans. This can help them visualize better what the relative costs might be, along with the fact that sometimes, there just isn’t enough to get what they want.

What he doesn’t recommend is abstaining from these difficult conversations altogether. “The absence of [these conversations] makes it a little bit difficult for kids to understand how the world works, from a budgetary standpoint,” Storch said. As he notes, these are “critical building blocks for them being financially responsible as they age.”

How to find alternatives for their “wants”

Once you’ve had a discussion about money, and helped your kids understand that it isn’t an infinite resource, one way to help them deal with the disappointment of not getting what they want is to help them brainstorm alternatives that are either low-cost or free. For older kids, if their heart is set on buying an expensive item, such as a video game, one option is help them make a plan for how to save up for it. Maybe there are extra chores they can do for family members or neighbors to earn some extra cash.

“Getting their kids everything doesn’t necessarily make it the best thing,” Storch said. “It’s important for kids to learn how to deal with no, and understand what that means, and to understand that with hard work comes rewards.”

For more on how to teach kids financial concepts in an age-appropriate way, read our age-by-age guide to teaching kids about money.

  

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