Plenty of parents have heard the voice of a child adamantly declaring their dire "need" for a toy, item of clothing, or electronic device. In their desperate begging, they may actually feel the coveted item is completely necessary for their survival and happiness—but you know as much as they want that item, it isn't essential. 

For the last six months, my seven-year-old has told me all about his "need" for a Nintendo Switch, a gaming device owned by the majority of his friends at school. The deeper I probed the reasons he "needed" it, the more I could see he didn't understand the difference between a "need" and a "want." He "needed" it because all his friends have one, there were games he couldn't play on our ancient Xbox, and his brothers were always hogging the TV, depriving him of the gaming experience.

He doesn't need a Nintendo Switch, but he certainly wants one. As his parent, I want to set him up with financial priorities that will follow him for the rest of his life, when he has to make decisions on his own about how to spend his money. 

Why kids struggle to recognize the difference between “needs” and “wants”

As a licensed psychologist specializing in working with children, Dr. Laura Kauffman understands how children's brain development factors into why they are unable to recognize when something is a need, as opposed to a want.

"Toddlers and preschool children are working through the essentials of emotion regulation—learning to cope with big feelings," Kauffman explains to Parents. "Young children may know they want something, but struggle with delayed gratification. They don't have many scripts or stories in their minds around the value of importance of waiting, the problems of overconsumption, and impacts on the environment." 

To young children, everything may feel like a need, simply because their brain hasn't fully formed enough to understand otherwise. As they age, children's understanding of money, needs, and wants, are increasingly informed by their surroundings. 

"In my experience, I see kids struggle to differentiate between needs and wants for a variety of reasons," Rob Phelan, Certified Financial Education Instructor and author of M is for Money, tells Parents. "The adults in their lives don't use the word 'need' correctly either, so it's being modelled incorrectly to them." Parents may say they need a new coat, car, or seasonal drink from the coffee shop—all legitimate wants, but not always needs. Kids pick up on word choice and copy what they hear. 

"Also, children often don't make any decisions around purchasing their needs, since they are typically provided by the parent or guardian," says Phelan. Parents pay for their kids' food, housing, electricity, gas, and water—all the things they actually need. "Therefore, needs are just a higher priority 'want' to them based on their categorization of desires."

Finally, Phelan points out children aren't often intentionally taught the difference between needs and wants, leaving them without the knowledge to distinguish between the two. 

Little girl begs her mom to buy a toy

How to teach kids the difference between “needs” and “wants”

To help children differentiate between what they truly need and what they want, Phelan suggests starting simply.

"Bring the vocabulary into everyday moments with your kids," he encourages. When getting ready to leave the house in the morning, ask them what they need to bring and quiz them about what would happen if they left it at home. Would it cause them harm? Threaten their survival? If not, it isn't a true need. On a cold winter day, a coat is a need; without it, we wouldn't be protected from the freezing temperatures. However, forgetting a phone or toy won't harm us, so those would be classified as wants. 

Phelan suggests baking to find out which ingredients are essential to the finished product. "Which ingredients are key to the success of the cake and which are just extras," Phelan would ask. "A cake without flour won't work, but sprinkles are optional."

How to respond to wants

Perhaps you have helped your child to recognize the difference between needs and wants but feel unprepared for how to explain the reasons you will not purchase every coveted item they beg for.

"Research shows that the best parenting approach for overall emotional and behavioral outcomes is authoritative parenting," says Kauffman. "Assuming the parents do not want to accommodate for their child's request, they can respond with compassion, but a firm boundary."

When a young child locks her eyes onto a new Lego set, the parent can verbally acknowledge why she may want it, but then compassionately say no to the purchase, validating the child's subsequent feelings of disappointment. 

"My biggest advice happens way before the child sees something they really want," Phelan says. "When you and the other adults in the household are making a budget or planning ahead for the month, give your child the highlights when you are done, and even involve them in the process as they get older. Share what the needs are for the family and explain those get priority." 

Once the needs are met, families can work out the amount of money left and plan which "wants" they will spend it on. "You are communicating there is a plan for how you spend money as a family, the plan supports what everyone wants to do and agreed to support, and this new want wasn't part of the spending plan," Phelan explains. "If you want to adjust the plan, some other want is going to have to drop off and not get funded."

While the language of needs and wants will not come naturally to children, parents can intentionally work to teach the concept to prepare children for a lifetime of healthy financial priorities. 


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