by Donna Ryan

Created on: February 13, 2011

Discerning between a “Want” and “Need”

You may have heard your parents exclaim, “Money doesn’t grow on trees!” Or, you might remember their exasperated voices when they conveyed how hard, at times, it was to make ends meet. Clichés aside - when you want something as a kid, you generally think that your parent is depriving you of something that you think you need. That’s why it’s important that parents help kids make the distinction between a “want” and a “need” when it comes to saving and spending money and learning the value of it. After all, it’s rather hard to establish a budget when this kind of discernment isn’t made.

Making Money is Part of being Responsible

Therefore, before you set out to give them a weekly allowance, make sure your kids understand the value of money by showing them the differences between wants and needs. By starting with this lesson, you can also teach your children how they can make money in order to make more money and spend it more wisely. After all, before you dispense that allowance, you want them to see that making or earning money is not just about spending it on material wants. It also entails responsibility, which includes creating spending and savings habits that focus on qualities, like dependability and consideration, which are important as well.

Avoiding Impulse Spending

Of course, since you supply most of your kids’ needs, they may find this concept of saving a little hard to grasp at first. Therefore, if they are at the store, for example, and just to have to have a certain item, tell them they’ll have to wait. If they want a video game, for instance, ask them to hold back from purchasing it for three weeks and see if I they feel the same way. Typically, their desire for a toy or item will have waned by that time or they might just forget about it altogether. This is a good way of showing them the implications of spending their money on an impulse purchase.

Quality Control

Once you give your kids an allowance for doing certain tasks around the house, help them see how long it takes to earn the money in order to buy a coveted toy or game. This can help them focus better on their savings priorities. Also, make sure they understand about the quality of what they are buying as well. Sometimes, it’s better to wait and buy an item that costs more and will provide more durability versus purchasing a lower-priced product that is similar but isn’t as sturdy.

Making Prudent Choices – Teaching your Kids to Save and Spend their Money more Wisely

Of course, setting up a budget and helping them understand the basics of saving and spending can complement any of the aforementioned lessons. If you want them to avoid some of the mistakes in spending you’ve no doubt made, you have to make sure they are fully aware about a product’s quality, if it’s a need or want, and if it is a want, if maybe their money could perhaps be saved or spent on a more worthwhile goal or objective.

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