Does your child ever plead for the latest toy or insist on that fancy new gadget? It’s a common scenario for parents everywhere. Teaching children the difference between a need and a want is one of the most valuable financial lessons they can learn, and it’s a critical first step to becoming a smart saver and spender.
Understanding the Terms: Needs vs. Wants
Before we can teach our kids, we need to be crystal clear ourselves.
- A need is something that is essential for our survival and well-being. These are the things we can’t live without. Think of the basics: food, water, clothing, and shelter. Without these, we can’t be healthy, safe, or happy. For a child, a need is also something required for their education, like school supplies or books.
- A want is something that we desire but can live without. Wants are the fun extras—the treats, toys, and gadgets that make life more exciting but aren’t necessary for survival. Things like a new video game, a trip to the movies, or a new toy are all wants.
Understanding this difference is a foundational life skill. It helps us make thoughtful decisions, especially when it comes to money.
The Connection to Maslow’s Hierarchy
This concept of needs and wants is actually rooted in a famous psychological theory called Maslow’s Hierarchy of Needs. Psychologist Abraham Maslow suggested that human needs are arranged in a pyramid, with the most basic needs at the bottom.
- Physiological Needs: This is the base of the pyramid and includes our fundamental needs like air, water, food, and sleep.
- Safety Needs: This level is about feeling safe and secure, which includes shelter, personal security, and health.
- Love and Belonging: This level is about our social needs, such as friendships, family, and connection.
- Esteem: This level is about feeling a sense of accomplishment and respect from others.
- Self-Actualization: At the top of the pyramid is the need to reach our full potential.
By teaching kids about needs, you’re helping them understand and prioritize the most important things in life—the very base of Maslow’s pyramid. Wants are often related to the higher levels, like entertainment or personal achievements. This connection helps them see that you have to take care of your basic needs before you can spend on the fun stuff.
The Financial Impact: Spending and Saving Habits
The needs vs. wants distinction is a game-changer for a child’s money habits.
- Mindful Spending: When a child learns to identify a want, they start to pause before they buy. Instead of an impulsive “I want it!”, they can ask themselves, “Is this a want or a need? Do I really want to spend my money on this, or should I save it for something bigger?” This simple question puts them in control and helps them avoid spending money on things they might regret later.
- Purposeful Saving: When a child understands that they have to pay for their needs first (like a small portion of their allowance for school supplies or a family outing), they realize that money isn’t just for fun. This teaches them to save money for the things that really matter and to be more intentional with their savings for bigger wants.
Fun Activities to Practice Wants vs. Needs
Learning shouldn’t feel like a chore! Here are some fun, hands-on activities to help your child master the concept of wants versus needs.
Activity 1: The Magazine Cut-Out Game (Ages 4-7)
Grab a few old magazines, some paper, and scissors. Have your child cut out pictures of things they see. Then, get them to sort the pictures into two piles: one for “needs” and one for “wants.” As they sort, ask questions like, “Why is a banana a need, but a candy bar is a want?”
Activity 2: The Shopping Trip Challenge (Ages 8-10)
Before you go to the grocery store, give your child a list of 5-10 items and a pretend budget. Have some “needs” on the list (like bread and milk) and some “wants” (like a special cereal or their favourite juice). Challenge them to stick to the budget while making decisions about which wants they can afford, if any. This is a great time to discuss a “want” they have to give up to stay on budget.
Activity 3: The Savings Goal Poster (Ages 10-12)
Help your child choose a big item they want, like a new video game or a scooter. Create a poster with a picture of the item at the top. Below, list all the needs that must be covered before they can start saving for the item. For example, “Need: Pay for my portion of the family phone bill.” This visual tracker helps them see that wants come after needs.
Teaching children the difference between wants and needs is one of the most powerful steps you can take to set them up for a life of financial confidence. It’s not about restricting them; it’s about empowering them to make smart choices for themselves.
What are some of your favourite ways to talk about wants and needs with your kids? Share your tips in the comments below!