Helping children understand the difference between wants and needs is an important life lesson and skill. By teaching children how to prioritise needs over wants, parents can provide them with an invaluable foundation in financial responsibility that will benefit them throughout their lives. This article explores effective ways for parents to have constructive discussions with their children about wants versus needs and manage expectations.
Talking About Your Household Finances
Perhaps the most direct way to help children learn about prioritising needs over wants is to talk openly with them about your household finances. Explain that you have a budget for necessities like food, housing, electricity, and other basics. For example, if you’re a foster carer with an agency like www.thefca.co.uk, you could discuss your fostering allowance and how it covers costs like food and clothing for your foster child. Highlight how spending too much money on unnecessary wants would impact your ability to pay for true needs.
Use Concrete Examples
Using concrete examples can make the abstract idea of wants versus needs more tangible for children. For instance, if they ask for an expensive toy, explain that while that is a want, you need to save money for necessities like groceries and school supplies. Or if they want to eat at restaurants frequently, point out how that would diminish the grocery budget for meals at home. Simple, everyday examples help illustrate how frivolous spending on wants affects the family’s ability to meet its needs.
Involve Them in Budgeting
Actively engage children in household budgeting to deepen their understanding. Sit down together to review bills and expenses. Explain how you decide what is in the budget each month, emphasising needs like rent and utilities versus discretionary wants. Allow older children to help track spending or even allocate a small part of the budget for their wants. Hands-on experience with trade-offs and limitations helps cement their learning.
Assign Money Management Tasks
Give children an allowance or let them earn money through chores, then require them to manage it responsibly. Have them divide their funds into sections for spending, saving, and charity. When they want to purchase something, ask them to check if they have enough set aside in their “spending” fund. If not, discuss whether it is worth saving for or if it is merely a “want” they can live without. Practicing financial decisions teaches valuable skills.
Do Not Overindulge
While occasional treats are fine, beware of consistently overindulging children’ wants rather than needs. Saying “yes” too often can undermine lessons about prioritisation and make children believe they can have whatever they ask for. Set realistic expectations by communicating that many fun items need to stay on the “wish list” until there is money set aside for wants. Stick to needs like nutritious food, comfortable clothes for the weather, and school supplies.
Explaining the difference between wants and needs requires ongoing age-appropriate conversations and lead-by-example money management. But teaching children financial responsibility and wise prioritisation is a gift that will help them for the rest of their lives. With patience and consistency, parents can impart money skills that help children balance wants and needs, both now and in their future as independent adults.
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