COINcious Kids: How to Teach Children the ABCs of Money – Needs vs. Wants

Introduction

Teaching children about money at an early age is essential for developing strong financial habits that will benefit them throughout their lives. Many adults struggle with managing finances simply because they were never taught the basics of money management as kids. One of the most important financial lessons children need to learn is the difference between needs and wants—a fundamental concept that lays the groundwork for smart spending, saving, and budgeting.

The book COINcious Kids: How to Teach Children the ABCs of Money introduces financial literacy to kids in a fun and engaging way, helping them understand key money concepts that will shape their financial future. In this article, we will explore the importance of teaching children about needs vs. wants, practical ways to introduce these concepts, and how parents can make financial education a part of everyday life.

Why Teaching Kids About Needs vs. Wants is Important

Understanding the difference between needs and wants helps children develop:

Smart spending habits – Avoiding impulse purchases and learning to prioritize essential expenses.
Savings discipline – Knowing when to save money instead of spending it on unnecessary things.
Financial independence – Building responsible decision-making skills from a young age.

Without this knowledge, children may grow up struggling with debt, overspending, or financial stress because they never learned how to differentiate between essential and non-essential expenses.

What Are Needs and Wants?

Needs: The Essentials for Living

Needs are things that are necessary for survival and well-being. Every family’s needs may vary slightly, but they generally include:

Food and water – Essential for survival and health.
Shelter – A safe place to live, including rent or mortgage payments.
Clothing – Weather-appropriate clothing for protection and comfort.
Healthcare – Doctor visits, medicine, and insurance for staying healthy.
Education – Books, school supplies, and tuition for learning.

Wants: Things That Are Nice to Have

Wants are things that we desire but can live without. They make life more enjoyable but are not necessary for survival. Examples include:

Toys and video games – Fun, but not essential for daily living.
Dining out and treats – Buying fast food or ice cream instead of eating home-cooked meals.
Designer clothing and accessories – Expensive brands that are not necessary for basic clothing needs.
Luxury items – High-end electronics, fancy cars, or the latest smartphone.
Entertainment and travel – Movies, amusement parks, and vacations.

By helping children recognize the difference between needs and wants, they will begin to understand that money should be used wisely to cover needs first, and then, if possible, be saved or used for wants.

How to Teach Kids About Needs vs. Wants

1. Use Real-Life Examples

A great way to introduce needs vs. wants is by using real-life examples during shopping trips.

When at the grocery store, ask: “Do we need milk, or is this candy just something we want?”
When buying clothes, explain the difference between basic school shoes (need) and the latest fashion sneakers (want).
At a toy store, encourage kids to think: “Do I really need this toy, or do I just want it because it’s new?”

2. Create a “Needs vs. Wants” Chart

Make a simple T-chart with two columns: one for needs and one for wants. Ask your child to sort items into the correct category. This activity helps them visually understand how spending decisions work.

3. Give Kids an Allowance

Allowances provide children with hands-on experience in money management. Encourage them to:

Save a portion of their money for important things.
Spend wisely by prioritizing needs before wants.
Donate a small portion to charity to teach generosity.

4. Play Money Games and Activities

Learning about finances should be fun and interactive! Some money-related games include:

Board games like Monopoly or The Game of Life, which simulate real-life financial decisions.
Pretend shopping where kids use play money to “buy” different items, practicing needs vs. wants.
Digital apps designed for financial literacy, such as PiggyBot or Bankaroo.

5. Encourage Goal Setting

Help kids learn the value of saving by setting a goal for something they want to buy. If your child wants a new video game or toy, encourage them to save their allowance instead of buying smaller, unnecessary items.

6. Be a Role Model

Children learn by watching their parents. Show them how you budget, save, and make smart financial choices. Instead of impulsive shopping, explain how you decide between needs and wants in your own life.

The Long-Term Benefits of Teaching Kids About Needs vs. Wants

When children understand financial responsibility early in life, they are more likely to:

Develop better spending habits and avoid financial struggles in adulthood.
Appreciate the value of money and understand that it is earned through hard work.
Make informed financial decisions that help them build savings and achieve financial security.

A strong foundation in financial literacy empowers children to become independent, responsible, and financially secure adults.

Conclusion

Teaching children about needs vs. wants is one of the most valuable life lessons parents can provide. It helps kids develop smart money habits, make responsible financial decisions, and understand the importance of saving and budgeting. By using real-life examples, games, and hands-on experiences, parents can make financial education both fun and impactful.

Start teaching your child the ABCs of money today and help them build a bright financial future!

📺 Watch this video to learn more: https://youtu.be/SWUZ1oXlp7A