Teaching Kids About Needs, Wants, & Choices

By Garrett Lloyd | Apr 8, 2022 7:59:00 AM

Financial responsibility doesn't come all at once. It comes as a person learns skills throughout their life that carry over to their finances. With the right resources, learning these skills can begin at a young age. They can be as simple as recognizing the differences between needs and wants, and how to choose between multiple options.

Needs vs. Wants

It takes time for children to learn how to properly identify and express what they feel. To them, everything may feel like a need. On top of that, they’ll often hear adults in everyday life referring to things as "needs" when they are really wants (e.g., “I need to get that new truck” or “I need to get my nails done"). Because of this, you may have to set aside some time to talk with your child about the differences between the two. Other times, life will present teaching opportunities on its own. For instance, many a parent has struggled with a child that won’t eat what's on the menu for dinner (especially when it comes to vegetables!). This could be an opportunity to explain that they need to eat dinner in order to stay healthy; and although they may want dessert, it’s something extra that they don’t need and won’t earn until they’ve finished enough of their meal.

When it comes to sitting with your child and discussing needs vs. wants, you may be able to find children’s books that can help them understand. There may also be helpful online resources and videos tailored to children.

Opportunity Cost

Once your child understands the basics of needs and wants, they may be ready to learn about opportunity cost. Opportunity cost is what is lost or given up by choosing one alternative over another. While it isn't necessary for kids to know what this concept is called, many elementary-school-aged children will be able to grasp onto the general idea. This can help them when it comes to making choices between multiple needs or wants.

As an example, imagine that your child is saving money to buy a video game. One day while you're at the store with them, they tell you that they want to buy a couple of toys they've just seen. At this point, you could stop for a moment and help them think through this. You might explain that they can buy the toys now and start playing with them once you get home, but then they'd have to wait longer to get the video game as they make up for the money spent on the toys. If they choose to wait and continue saving for the video game, the opportunity cost will be the chance to be entertained with new toys now.

When all is said and done, teaching your child the concept of opportunity cost is simply teaching them how to weigh pros and cons when they need to choose one option over another.

Special Offer

Another great way to teach your child financial responsibility is with a Cyprus Dollar Dog account. This account is ideal for kids aged 12 and under, and can help them learn the importance of managing money. In honor of Credit Union Youth Month, we’ll give you $5 to get your child’s Dollar Dog account running when you open it in April.

Dream Certificates of Deposit (CDs) are also excellent savings tools. Open a Cyprus Dream CD during April for your child aged 18 and under, and we’ll match your initial deposit up to $25.

Click here to learn more about these offers. Give us a call at 801.260.7600 or visit any Cyprus branch if you have questions.

Topics: dollar dog, kids saving, credit union youth month, financial education

Author: Garrett Lloyd