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Are there activities I could use to teach my child about needs and wants?

When trying to teach your children about needs versus wants, consider pointing out items like food and toys as you shop and ask them to tell you which category each fits in to.

Understanding the difference between needs and wants is a bedrock concept that can lead to a lifetime of better financial decision making.

Needs include the basic things we need to survive – food, clothing, and shelter. But we also need to earn a living so we can pay for those basic needs and things we want. So, we need reliable transportation and the tools and resources necessary to do our jobs well. We also need to build and protect our assets so we can keep meeting our needs in the future – this includes emergency savings and insurance.

Wants are all the upgrades and other things that would be nice to have but aren’t necessary for living, earning and protecting what we have.

Knowing the difference is the key to purchasing decisions, and the payment choices that young people will one day face.

So here are some activities you can try with your children:

  • When you are out shopping, point out essentials such as food and clothing, and ask your child to describe items that she may want but are optional.
  • Talk about how your family decides what to buy and what to pass up. Which is more important: Buying cookies or fresh fruit? Soda or milk?
  • Draw a circle and divide it into sections for food, rent or house payments, clothes, and "optional items," to show that there is a finite amount of money to spend.

For more money activities for your child, visit our Money As You Grow section.