Helping kids understand the difference between needs and wants is one of the most important first steps in teaching them how to manage money. When children learn how to tell the two apart, they begin to make smarter spending choices—and start building habits that can last a lifetime.
As parents, we often explain the value of saving or making careful choices, but the idea of “needs vs. wants” is where it all begins. This guide will help you talk about this concept clearly and in a way your child can understand and apply.
What Are Needs?
Needs are the things we must have to live and stay healthy and safe. These are the items we can’t do without—no matter how old we are.
Here are a few examples of needs:
- Food and water
- A place to live (shelter)
- Clothes to wear
- Health care and medicine
When families plan their budgets, these things usually come first. They’re essential for daily life and must be paid for before anything else.
What Are Wants?
Wants are the extra things we enjoy, but we don’t truly need to live or stay healthy. That doesn’t mean they’re bad—just that they should come after our needs are covered.
Examples of wants include:
- Toys and games
- The newest phone or gadgets
- Trips to amusement parks
- Fast food or snacks
- Fancy clothes or branded trainers
Wants can make life fun and exciting, but they aren’t urgent or necessary. Teaching children to spot the difference helps them understand that sometimes we need to wait, save, or make choices.
Why It’s Important to Know the Difference
When kids learn the difference between needs and wants, they’re better prepared to make smart money choices. It teaches them that we can’t always buy everything we want—and that’s okay. Prioritising needs helps us stay on track with our spending and avoid using up money too quickly.
It also builds important decision-making skills. For example, if your child has £10 and wants both a toy and a school item, talking through which one is a need and which one is a want helps them choose wisely.
How to Teach Needs and Wants for Kids
Start by using examples from daily life. The next time you go shopping, point out what you’re buying and ask, “Is this something we need or want?” You can also play sorting games at home with photos or cut-outs from magazines.
Let your child practise with their own spending. If they get pocket money, encourage them to think before buying: “Do I need this now, or would it be smarter to save up for something else?”
Understanding needs and wants is a small idea with a big impact. It helps kids become thoughtful, confident, and responsible with money—and that’s a skill they’ll use for the rest of their lives.
If you’d like more help teaching money basics in a fun, interactive way, check out the Smart Money for Kids course at smartkidseducation.org. It’s made for kids aged 8–13 and covers saving, spending, budgeting, and more.
More information on our Facebook Page: https://www.facebook.com/SmartKidsEducation.org
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