How to Teach Children to Distinguish Between Wants and Needs
As parents, we all want our kids to be happy – we want them to have that coveted toy or the next fun adventure. But there will always be times when your kids will want something that doesn’t fit into the family budget; an expensive new video game, an expensive summer camp, or a fancy piece of clothing won’t always be possible. However, when this happens, you have the opportunity to talk to your children about the realities of money , including distinguishing between what we want and what we need .
As much as they want a new toy, a game, or a trip to an amusement park, understanding how money should pay for our basic needs like food, shelter, and clothing in the first place, versus non-essential desires, is an important step that children can do. move on to financial literacy.
How to talk to kids about money
When it comes to talking about the inaccessibility of some of their desires, “it’s important to be direct but confident and reassuring,” said Eric Storch , professor of psychology at Baylor College of Medicine. He suggests showing empathy by acknowledging their desire while at the same time finding age-appropriate ways to help them understand why they might not be getting what they want.
“Your response may vary with age and maturity,” Storch said. With the young, he recommends recognizing their desires with a sensitive response, and then turning around. With older children, he recommends having a more detailed discussion that recognizes the family budget, and then helps them brainstorm financially feasible ways to meet their desires.
To help your children begin to understand the value of money, Storch suggests using cues that can help make the concept tangible, such as tokens, buttons, or beans. This can help them get a better idea of what the relative costs might be, as well as the fact that sometimes they just aren’t enough to get what they want.
What he does not recommend is to abstain from these difficult conversations altogether. “Lack of [those conversations] makes it a bit difficult for kids to understand how the world works in terms of budget,” Storch said. As he notes, these are “important building blocks for financial responsibility as you age.”
How to find an alternative to your “wants”
Once you’ve discussed money and helped your kids understand that it’s not an endless resource, one way to help them deal with the frustration of not getting what they want is to help them brainstorm alternatives. , which are either low-budget, paid or free. For older children, if their heart is set on buying an expensive item like a video game, one option is to help them make a plan to save up for it. Maybe there are extra responsibilities they can take on for family members or neighbors to earn extra money.
“Just because kids get everything doesn’t necessarily make it the best thing,” Storch said. “It’s important for kids to learn how to deal with no, understand what it means, and understand that hard work is rewarding.”
To learn more about how to teach kids about finance in an age-appropriate way, read our age-appropriate guide to teaching kids about money .