It was Saturday morning, and eight-year-old Emma had $12 burning a hole in her pocket.
Her parent had taken her to Target, where she spotted a glittery, rainbow-colored stuffed llama.
“I NEED this,” she declared, hugging it tightly.
Her parent smiled.
“You need it?”
Emma nodded, serious as a judge.
They stood there in the toy aisle, having the same conversation most families have a thousand times: What’s a want, and what’s a need?
And here’s the surprising truth—many adults still blur those lines. The way parents teach their children about money isn’t just about saving and spending; it’s about shaping how they think about money for the rest of their lives.
Why Kids Struggle to Tell Wants from Needs
Children aren’t born knowing the difference between a new LEGO set and a winter coat. Psychologically, their brains are wired for instant gratification.
According to Harvard University’s Center on the Developing Child, the prefrontal cortex—the part of the brain that handles impulse control and decision-making—doesn’t fully develop until the mid-20s. This means young children naturally prioritize what feels good right now over what’s best for them later.
When they see something shiny and new, dopamine (the “feel-good” brain chemical) floods their system. That’s why “I want this” can feel just as urgent as “I need food or water.”
It isn’t manipulation—it’s a genuine emotional reaction. But if children don’t learn how to pause and evaluate, they risk growing into adults who:
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Spend money they don’t have.
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Rely on credit cards for non-essentials.
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Struggle to save for emergencies or retirement.
The good news is that families can teach the difference without turning money lessons into lectures.
Why This Lesson Matters for a Lifetime
Understanding wants vs. needs is more than a shopping skill—it’s a foundation for lifelong financial health.
When children learn this concept early, they also develop:
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Delayed gratification — the ability to wait before making a purchase. Research from the American Psychological Association shows that people who can delay gratification often enjoy better financial stability and stronger relationships.
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Prioritization — understanding that essentials like rent, food, and savings must come before luxuries.
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Self-control — making choices based on long-term benefits rather than short-term pleasure.
These lessons ripple forward into adulthood, helping future adults avoid debt traps, plan ahead, and feel confident in their financial decisions.
The 3-Step Story Method for Teaching Wants vs. Needs
Children connect best to lessons told through stories. Donald Miller often says, “People don’t buy the best products; they buy the ones they understand the fastest.” The same applies here—kids remember what they can clearly picture.
Parents can use this three-step approach:
1. Start with a relatable “need” story
Begin with a real-life moment when something was truly essential.
Example:
“One winter morning, the car wouldn’t start. The battery was dead, and without replacing it, there was no way to get to work. That battery wasn’t optional—it was a need.”
This shows that a “need” connects directly to survival, safety, or well-being.
2. Contrast with a “want” story
Share a time when something felt urgent but turned out to be non-essential.
Example:
“A few years ago, a high-end coffee maker seemed like it would make mornings perfect. After a few weeks, it sat unused. It wasn’t a need—it was a want, and the money could have gone elsewhere.”
By highlighting this contrast, children see that excitement often fades quickly.
3. Let them apply the rule themselves
When the child examines the stuffed llama or the brand-name sneakers and admits, “This is probably a want,” the lesson has landed. Applying the distinction on their own makes the concept stick.
The Question That Changes Everything
Instead of telling a child, “That’s not a need,” parents can teach them to ask:
“Will this help me or someone else survive, stay safe, or live a healthy life?”
If the answer is no, the item is a want.
The point isn’t to ban wants—life is richer with them—but to establish that needs take priority, and wants have to wait until essentials and savings are covered.
Everyday Opportunities to Teach Wants vs. Needs
Money lessons are most effective when they’re part of everyday life:
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At the grocery store:
“Bread, milk, and eggs are needs. The cupcakes are wants. If our budget allows, we can get both, but we start with the needs.” -
While shopping online:
“Let’s check the budget first. Do we have room for this new toy? If not, we can add it to your ‘wants’ list for later.” -
During allowance time:
Use three jars labeled Needs, Wants, and Savings. Encourage children to put a percentage of their allowance in each jar.
The Consumer Financial Protection Bureau offers free resources to make these activities interactive and engaging.
Visual Cues for Younger Kids
A “Wants vs. Needs” chart can make the concept tangible. On one side, list or paste pictures of needs—shoes that fit, healthy food, school supplies. On the other, add wants—candy, toys, video games, trendy clothes.
When a child wants to buy something, they can place its picture or name on the appropriate side. This process turns a vague idea into a clear decision.
Why Kids Should Sometimes Buy “Wants”
Never allowing wants can backfire. Children who occasionally make small “want” purchases learn valuable lessons in self-regulation.
Spending $10 on a toy that breaks in a day stings—but it’s a safe, low-cost mistake. That lesson can help prevent a much bigger mistake later, like buying an expensive car they can’t afford.
Building the “Pause” Muscle
One of the simplest and most effective strategies is the 48-hour rule:
If it’s a want, the child must wait 48 hours before buying it.
During that time, they can:
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Look for better prices.
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See if the desire fades.
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Think about other ways to use the money.
Often, the excitement wears off, and the money stays in their pocket. This builds impulse control—something even many adults struggle with.
The Ripple Effect into Adulthood
Children who master this skill early are better prepared for the financial realities of adulthood. They’re more likely to:
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Build an emergency fund before splurging (NerdWallet explains why this is essential).
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Avoid high-interest credit card debt (Federal Trade Commission credit tips).
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Save for major milestones like a first home, college tuition, or starting a business.
This isn’t just about money—it’s about decision-making, patience, and long-term thinking.
A Simple Challenge for the Week
For the next seven days, every time a purchase comes up, the family can pause and ask:
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Is this a want or a need?
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If it’s a want, can it wait 48 hours?
Many “needs” will quickly turn into “wants” once the initial excitement fades.
Bottom Line
Children will learn about money from somewhere—it’s far better for them to learn it from intentional, everyday guidance at home. By making the wants vs. needs conversation a natural part of life, parents can equip their kids with a skill that will benefit them for decades.
And maybe—just maybe—years later, those same kids will be in a store with their own children, explaining why a glittery llama is a want, not a need.
