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Help Kids Understand the Difference Between Needs & Wants


One of the fundamentals of being financially literate is understanding the difference between a need and a want. The Center for Financial Empowerment, the nonprofit organization founded by SCE FCU, teaches these concepts regularly in their youth financial literacy programs.

While needs and wants might seem self-explanatory to most adults, exploring these concepts is a worthwhile exercise for children and teens. That’s because what defines needs and wants varies from one person to another, depending on their individual values. Being able to recognize what’s a need, and what isn’t, is a skill  that’ll help them develop positive spending habits.

Defining needs and wants

Parents can get kids thinking about needs and wants by simply asking questions during conversational times, like around the dinner table or in the car. What do you think a need is? Or if the child expresses a desire for something, ask Do you need it? Or do you want it? What do you think the difference is?

You can also help to guide the conversation by giving a broad definition. Needs are goods or services required for survival. Food, water, clothing, shelter and basic health care are general needs for everyone. On the other hand, wants are those items that can increase our quality of life but aren’t absolutely necessary for our survival. Having things we want makes life more enjoyable. 

Point out items around your home and ask your child if it’s a need or a want. Rather than confirming their answer as right or wrong, ask them to explain their reasoning. Ask if they can think of a reason why someone else might think differently about the same item. There may be good reason why something is a want to one person and is a need to another.

Real World lessons 

If you’re really bold, let your kids chime in on some of your family’s actual spending decisions. Let them see instances where you forego spending on extras so you can provide your family’s needs. And point out when you can enjoy purchasing those wants because your needs are covered.

While the concepts of needs and wants may seem like a no-brainer to adults, it’s not always so straightforward for kids. Being intentional about thinking, talking through, and demonstrating these concepts can lay the foundation for strong financial skills in the future.


Help us empower the next generation for financial success! 

The Center for Financial Empowerment is a 501c3 nonprofit organization whose mission is to empower disadvantaged youth through financial literacy education. Find out more about our work at