“I really want that one,” is a phrase that surely every parent has heard many times. Whether it’s the desire for a chocolate bar instead of breakfast cereal, or a pair of sparkly sandals instead of new school shoes, there are plenty of childhood wants that seem (to our children) far more important than the things they actually need.
Being able to easily prioritise needs before wants is a terrific skill to have at every stage of life – from just starting out, right through to retirement. So learning how to distinguish between needs and wants – and allocate money accordingly – will give your kids a great head start in being able to manage a budget down the track.
Where to start? To an extent it will depend on the age of your child, so here are a few age-appropriate suggestions – and I’d love to hear your suggestions as well.
- Preschool age. For this age group, the weekly or fortnightly trip to the supermarket can be a great learning experience. If you take along a written shopping list that includes all your grocery needs, your child can help you find each item and tick it off the list. Then perhaps let your child know that in addition to the many needs, there will be enough money for one “want” item – which your child can choose. It can be an easy and fun way to practise buying needs before wants, as well as weighing up and choosing the many wants that are available.
- Primary school age. By the time they reach primary school, children’s attention spans have lengthened and they are able to set some medium-term savings goals. A savings progress chart on the fridge, with a picture of the end goal, can help to keep them focused and sharpen their resolve not to give in to daily “wants”. The sense of achievement they will feel when they finally hand over their savings for the prize makes the whole process a great learning experience.
- Plus… Another easy way to reinforce needs is to let your child watch you pay the household bills. Electricity, gas, rates or rent – even petrol in the car. These are all needs. Being open about paying these bills before thinking about wants can be a great way for your child to learn by example.
- Secondary school age. Around the time they start secondary school, kids may respond really well to being given responsibility and choices with regards to their own day-to-day needs. As an example, you might decide to provide your child with pocket money and entrust them to budget for things such as their bus pass, uniform and stationary needs, mobile phone account and, of course, spending money. Help them put together a written budget so they can plan for these costs without running short of cash.
Prioritising needs over wants is an ongoing lesson throughout life. Your children may not always make the right choice – just like us – but it can always be a useful learning experience.
For related posts and downloadable activity sheets about financial literacy for kids, visit The Beanstalk.