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- Spending Wisely
The first 20 MMM issues will cover basic financial literacy and will be sent on Wednesdays and Saturdays at a higher frequency.
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Hi Mentors!
In this article, we'll explore the importance of distinguishing between needs and wants and share practical tips to help your children spend wisely.
Did you know that the average American family spends about $1,800 per year on impulse purchases? That's why learning to differentiate between needs and wants is so important!
Teaching children the difference between needs and wants is a crucial step in developing their financial literacy. By understanding this concept early on, kids can make informed spending decisions and avoid the pitfalls of impulse buying.
MYTHS
Unfortunately, many people don't teach their children about needs vs. wants because they believe it's too complex or abstract for kids to grasp.
One common misconception is that kids are too young to understand the concept of needs and wants. However, this is far from the truth. Children as young as three can begin to learn the basics of this important lesson.
Another myth is that kids should always get what they want. While it's important to treat children occasionally, constantly giving in to their desires can lead to a sense of entitlement and poor financial habits.
Some parents also believe that teaching kids about needs and wants will take away their childhood joy. In reality, this lesson helps children develop a healthy relationship with money and appreciate what they have.
STORYTIME
The Wise Spender and the Impulsive Buyer
Once upon a time, in a big, busy city, there were two siblings named Lily and Max. They were both very excited because their grandparents had given them $20 each for their birthdays. They couldn't wait to go to the mall and spend their birthday money.
When they got to the mall, Max saw a super cool remote-controlled car. He loved it so much that he spent all of his $20 on it right away. He was so happy to have this new toy and couldn't stop smiling.
Lily, on the other hand, remembered what her parents had taught her about needs and wants. She thought carefully about what she really needed. She realized that her school backpack was getting too small and worn out. So, she decided to buy a new backpack with some of her birthday money. With the money she had left, she bought a book that she had been wanting to read for a long time.
A few days later, something unfortunate happened. Max's new remote-controlled car broke, and he didn't have any money left to buy the school supplies he needed for a big project. Lily, who had made smart choices with her money, was able to help Max buy the supplies he needed. She even had a little money left over, so she bought ice cream for both of them.
As they enjoyed their ice cream, Lily explained to Max why it's important to think before spending money. She told him that it's better to buy things we need before buying things we want. She also said that it's good to consider how long something will last and if it's really worth the money.
Max learned a valuable lesson that day. He understood that being wise with money means making smart choices and thinking about the future. From that day on, both Lily and Max always paused to think before spending their money, and they lived happily ever after.
Listen to Today’s Story 👇️
BREAK IT DOWN
Age 3-5 | Age 6-10 | Age 11-14 |
|---|---|---|
“You know how we need food to grow big and strong? That's a need. And you know how you really like playing with your favorite toy? That's a want. Needs are things we must have, and wants are things we'd like to have. It's important to make sure we have our needs first, like food and a place to live, before we get our wants. When you choose to buy something you need instead of something you want, that's a really good choice!” | "Let's talk about the difference between needs and wants. Needs are things that we absolutely must have to live, like food, clothes, and a place to sleep. Wants are things that we would like to have but can live without, like toys, video games, or candy. It's important to think carefully about our needs and wants when we spend our money. How about we make a list of your needs and wants? Then, we can talk about which things are most important to spend money on first. Remember, if you spend all your money on wants, you might not have enough for your needs." | "As you start to manage your own money, it's important to understand the difference between needs and wants. Needs are essential expenses, like food, clothing, school supplies, and savings for the future. Wants are things you'd like to have but aren't necessary, like the latest gadget or trendy clothes. A smart way to handle your money is to create a budget. This means you decide how much money you'll spend on your needs first, and then save some money for your wants. Sometimes, you might have to wait and save up for a want, and that's okay. This is called delayed gratification. By planning ahead and setting financial goals, you'll be able to make wise choices with your money and have a better future." |
TIME FOR ACTION
Create a "Needs vs. Wants" list with your child:
For younger kids (6-9): Use pictures or drawings to represent needs and wants, making it a fun and visual exercise.
For older kids (10-14): Encourage them to write down their expenses and desires, categorizing them as needs or wants.
Encourage your child to wait before making a purchase:
For younger kids (6-9): Implement a "waiting rule" where they must wait a certain number of days before buying a wanted item, helping them distinguish between impulse buys and genuine desires.
For older kids (10-14): Teach them to research and compare prices, as well as consider the long-term value and usefulness of the item they want to buy.
Praise your child when they make responsible spending choices:
For younger kids (6-9): Use a reward system, such as stickers or extra playtime, to reinforce good financial habits.
For older kids (10-14): Offer verbal praise and discuss how their wise choices can lead to greater financial stability and opportunities in the future.
Start the "Needs vs. Wants" conversation with your child today. Help them create their own list and guide them in making smart spending choices. If you found this newsletter helpful, please share it with other parents who might benefit from these tips. We'd love to hear about your experiences teaching your children about needs and wants – feel free to reply with your stories or questions!
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