Spriha's Journey Towards Financial Literacy
Chapter 3: Needs vs. Wants
Key topics in this chapter
1.1 What are Needs? Things without which life would be challenging.
1.2 What are Wants? Things that can make our life more comfortable.
1.3 Making Choices: Teach decision-making skills involving money.
1.4 Exercise: Help your child make the right choice between needs and wants.
Introduction
In our last chapter, we accompanied Spriha as she embarked on her savings journey to get her dream bicycle. Today, we join her as she learns an important lesson about needs and wants.
What are Needs?
Needs are things that you must have to live and stay healthy and safe. Think of them as the essentials in life. Needs include food, water, clothing, a place to live, and education. Without these, life would be very challenging.
What are Wants?
Wants, on the other hand, are things you desire but can live without. They’re the extra things that make life more enjoyable, like toys, games, and treats. Wants are nice to have, but they’re not essential for survival.
Spriha loved her bicycle dream, but she knew it was a want, not a need. She had a safe home, food to eat, and clothes to wear – all her needs were covered.
Making Choices
Spriha’s parents taught her that it’s essential to make choices about how to spend her money. You can’t have everything you want, so you have to decide what’s most important.
Sometimes, you might have to choose between a need and a want. For example, if you have some money, you can decide to spend it on a new toy (a want) or save it for a school field trip (a need, because it’s educational).
Key Takeaways
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Needs are essential things required for survival, like food, clothing, and shelter.
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Wants are extra things that make life more enjoyable, like toys and treats, but they are not essential.
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Making choices between needs and wants is crucial, and sometimes, you might have to choose between them.
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Responsible spending involves taking care of needs before wants and making thoughtful choices.
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Understanding the difference between needs and wants helps children become smart spenders.
Spriha was learning that while it’s okay to have wants, it’s important to take care of her needs first. She was becoming a smart spender, and she knew that making thoughtful choices about her money was a big part of her journey towards financial literacy.
In the next chapter, Spriha will explore the world of earning money and discover different ways to make money as a young, responsible individual.
Exercise 3: Needs vs. Wants Decision-Making
It’s time to put your decision-making skills to the test. Make a list of things you want and things you need. Then, think about how you would spend your money if you had to choose between a want and a need. Share your thoughts with your parents.
Step 1: Create a List of Needs and Wants
- Materials: Get a sheet of paper and a pen or pencil.
- Divide the List: Draw a line down the middle of the sheet to create two columns. Label one column “Needs” and the other column “Wants.”
- Decorate: Use your coloured markers or pencils to decorate your chart and make it unique.
Step 2: Identifying Needs and Wants
- Define Needs and Wants: Discuss with your parents the difference between needs and wants. Wants are things you desire but can live without, while needs are essential for your basic well-being.
- Brainstorm with Your Family: Sit down with your family and create a list of items or things that you might want or need. For example, you may want a new video game, but you need food to eat.
Step 3: Make Your Own List
- Create Your Own List: On your sheet, make your own list of wants and needs. You can choose things that are relevant to you.
- Identify Items: Write down items or things you desire in the “Wants” column and items that are essential for your well-being in the “Needs” column. For example, a bicycle might go in the “Wants” column, while a geometry box would go in the “Needs” column.
Step 4: Making Decisions
- Review Your List: Take a look at your list of wants and needs.
- Analyse Each Item: For each item on the list, ask yourself if it’s a want or a need. Does it fall under the “Wants” column because it’s something you desire, or is it a “Need” because it’s essential for your well-being?
- Choose Between Wants and Needs: When you face a choice between a want and a need, think about your priorities. Which is more important at the moment? If you have limited money or resources, which should come first?
Step 5: Discuss Your Choices with Parents
- Share Your Choices: Talk to your parents about your decisions. Discuss why you classified each item as a want or a need.
- Ask for Guidance: If you have trouble deciding, ask for guidance from your family. They can help you understand the importance of prioritising needs over wants.
By completing this exercise, you’ll gain a better understanding of the difference between needs and wants. You’ll also develop the decision-making skills necessary to make responsible choices when it comes to your spending and financial priorities. This knowledge will be invaluable as you continue your journey toward financial literacy.