Money Wants vs. Needs

Children are not born with “money sense.” Money management skills must be learned. Whether you realize it or not, what children see and hear at home highly influences their attitudes and values about money. The ways parents insure themselves, discuss money, spend, borrow, save, share and invest will affect a child’s value system concerning money.

Preteens begin to realize that money itself has no value, but that it is needed to buy things they want. Fifth-graders are “collectors.” They want to save for specific things, usually one thing at a time. With continued practice, your fifth-grader will be able to save for bigger goals in the near future.

But how do you nurture that process at home? Be a good role model.

Effective money management is based on a realistic evaluation of individual and family needs, wants, values, goals and resources.

A “need” is something that is necessary, such as food, clothing or shelter. A “want” is something you would like to have.

Do you catch yourself saying, “But I need that new magazine”? Do you need or want it? To be effective money managers, you must meet your needs before satisfying your wants.

Go through the following activity and keep these points in mind:

• Guide and supervise rather than dictate.
• Praise positive points.
• Help your child learn through mistakes as well as successes.
• Be consistent.
• Be flexible and realistic.
• Be patient.
• Respect the child’s individuality.

Other useful publications:

FE-274, “What to Do When Your Income Drops”
FE-440, “How Much Should We Spend?”
FS-591, “Financial Values, Attitudes and Goals”