Teaching kids about finances doesn’t have to feel like meeting with your accountant. One of the most important lessons you can teach your kids about money has nothing to do with dollars and cents, but everything to do with how you spend.
You can teach your kids about wants vs needs, even if your money motto is let’s-not-check-the-bank-statement.
Here are five simple ways to teach your kids about money, priorities, and temptations… all without shoving a calculator in their faces.
1. Start with kid-friendly definitions
Explain the difference in their language.
- Needs: Things we can’t live without. Like food, clothes, a safe place to sleep, and toothpaste (ideally). Ask them what else counts. If they shout back ice cream, that’s fine. It’s a perfect way to start a discussion.
- Wants: The nice-to-haves. Like stickers, lollipops that light up, and designer clothing.
When eating breakfast, say, “You need to eat breakfast to have energy for school, but you want a waffle with whipped cream and caramel because it’s delicious.”
Let them create their own list. If they put a pet dinosaur or a private island under wants, even better. The point is understanding, not fact-checking.
2. Use real-life scenarios
Kids learn more from your on-the-go comments than from any sit-down talk. So leave your podium and head to the shop.
While you’re browsing through the aisles, say, “We need veggies to stay healthy, but we want cookies because they’re yummy.” Or, “Yes, you need shoes, but you want the ones that cost more than our fridge.”
Instead of saying “no, put that back!”, try “Is that a want or a need?” Some wants will still make it to the cart, and that’s fine. Balance keeps things fun and helps you sort through your wants.
3. Be honest about your choices
Kids notice everything, even your daily Amazon deliveries. Show them how you spend based on your wants and needs.
For example, you could share, “I want a new phone, but the one I have still works, so I’ll wait until I need one.”
You’re not trying to be perfect. You’re showing them how you differentiate between wants vs needs and make decisions based on that, like no, wait, or buy.
It’s okay to buy wants. It’s not okay to not recognize that it’s a want.
4. Involve them in family decisions
Kids love being involved in family decisions.
Try planning a meal together on a budget. “We need the main ingredients, but we want dessert. How can we make both fit into the budget?
Or allow them to choose between two wants. “Would you rather get takeout tonight, or save the money for a fun Sunday trip?”
They’ll learn the unbelievable truth that a credit card isn’t a magic portal to endless cash. Money is limited, but prioritizing your spending helps you get the most out of what you have.
5. Make it hands-on
Kids are visual learners, so talking alone won’t cut it. Coming up with fun activities turns spreadsheets and calculators into a game. Here are a few ideas for needs vs wants activities.
Have them write down things they’d love. Give them 2 different stickers, one for wants and one for needs. Let them sort through it and discuss the results. Ask, “Why do you think more silly putty is a need?” instead of thinking about the stain that won’t get off the couch.
Or, next time you’re in the shop, give your kids a challenge. They can buy 2 want items, but only 2, and the total has to come up to under $10. See what they come up with.
Small activities like those can make money feel empowering, not stressful.
The bottom line
When kids understand wants vs needs, they’ll see that needs come first, wants are allowed, and we can make smart choices based on our priorities.
Most importantly, you’ll help your kids build a healthy, confident relationship with money that doesn’t involve guilt-shopping, panic-spending, or hiding credit card statements.
The more normal money conversations you have with your kids, the less intimidating finances become.
