Hey there! Welcome back to the blog. Today, we’re diving into a fundamental concept for financial literacy that impacts not only how we spend, but also how effectively we save: Needs vs. Wants.

This might seem simple, but mastering the difference is the crucial first step toward building responsible spending habits and a strong financial future for our children.

Growing up in a low-income household, financial literacy wasn’t part of the conversation. Moving out, I scrambled to manage money, often blowing my paycheck on basic necessities with no savings to show for it. Big regrets, for sure! The only financial advice I got was from my Nanna – a simple yet powerful “put some money in savings.” Looking back, she was absolutely right.

Fast forward, I met my partner, and soon we were navigating parenthood and our first rental. The urgency to learn about money management hit hard. Enter the “Barefoot Investor,” my financial literacy awakening!

Understanding the difference between a Need (something required for survival or basic well-being, like food, shelter, and clothing) and a Want (something desired but not essential, like a new toy or expensive clothing brand) is more than just an academic exercise. It is the core of spending discipline.

When we confuse the two, we make financial mistakes. We overspend on non-essentials and potentially fail to cover our true needs, leaving little to no room for saving.

Even as a 27-year-old mom of three, my husband and I still make financial mistakes. But here’s the thing: we don’t want our kids to repeat them.

Here’s the critical connection often overlooked:

The less we spend on wants, the more we have available to allocate towards savings.

Teaching children to pause and categorize a purchase as a ‘Need’ or a ‘Want’ before they spend is teaching them the power of delayed gratification. This pause is where the saving muscle is built. By consciously choosing to defer a ‘Want’ purchase, they are essentially redirecting those funds into their ‘Savings’ category. This simple mental model empowers them to make intentional financial decisions.

That’s why I created The Saving Seed Money Blueprint: Workbook & How-to Guide for Parents.

The program is specifically designed for kids aged 5 to 12 years old and dedicates the first two weeks to deeply exploring the Needs vs. Wants conversation.

Through age-appropriate activities and discussions, the Blueprint explores:

• Wants vs. Needs: Giving kids a clear framework for differentiation.
• Delayed Gratification: Helping them understand the value of waiting for a larger goal.
• Spending and Saving Decision Making: Providing practical tools to choose intentionally where their money goes.

Stay tuned for our next blog post where we’ll explore strategies and tools to help your child differentiate between needs and wants. In the meantime, here are a few ideas:

• Age-appropriate activities: Make learning fun and engaging! Think games, role-playing, and real-life scenarios.
• Open communication: Encourage questions and discussions about money.
• Lead by example: Our spending habits speak volumes. Be mindful of your own choices.

Let’s empower our children to make informed financial decisions now so they can build a strong foundation for their future. They’ll thank us for it later!

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Click here to learn more about The Saving Seed Money Blueprint and start teaching your child about financial literacy!