In last week’s blog, we explored the pocket money debate, not just how much to give, but how to make those coins and notes meaningful. This week, we’re taking that learning one step further. Once children start handling their own money, one of the most valuable skills they can build is understanding the difference between needs and wants.
It sounds simple, but it’s a lesson that underpins every financial decision they’ll make for the rest of their lives.
Why “Needs vs Wants” Matters So Much
For adults, this distinction shapes our spending every day, from paying rent and buying groceries to choosing whether we really need that takeaway matcha. For children, though, those lines can blur quickly.
Helping children identify what they need (food, school supplies, clothes that fit) and what they want (another toy, a new game, the latest trainers) is about far more than budgeting. It’s about values, patience, and decision-making.
When children learn to pause and ask, “Do I really need this?”, they’re practising critical thinking - a skill that supports not only financial wellbeing but emotional intelligence too.
From Theory to Practice: Everyday Lessons for Families
The best way to teach this concept is through real-life choices.
Here are a few simple ways families can make “needs vs wants” part of everyday conversation:
- At the supermarket: Ask children to help compare prices between essentials and treats. Encourage them to identify what’s on the “need” list versus what’s an extra.
- At home: Before buying something new, talk about trade-offs: “If we spend money on this, what might we need to wait for?”
- When giving pocket money: Ask your child to divide it into two parts - one for “needs” (saving towards something practical or long-term) and one for “wants” (fun, personal spending).
These conversations help children build empathy and perspective. They start to see that money isn’t about restriction - it’s about choice.
The Classroom Connection
Many UK primary schools, including programmes supported by the Money and Pensions Service, are now embedding financial literacy into PSHE and numeracy lessons.
Teachers can turn “needs vs wants” into a lively classroom activity:
- Create two boxes labelled NEEDS and WANTS and give pupils cards with everyday items or experiences (school shoes, Wi-Fi, chocolate bar, birthday party).
- Ask them to discuss and vote where each belongs.
- Afterwards, talk about why some items - like the internet or a phone - might move between categories depending on the context.
This sparks debate, teamwork, and a recognition that money decisions aren’t always that simple.
Context: The Cost-of-Living Lesson
In 2025, UK families are still adjusting to rising prices and tighter budgets. According to the Office for National Statistics, inflation on food and household goods remains above 4 %.
Children are noticing these changes when they hear parents talk about cutting back or saving, it’s an opportunity to bring them into the conversation.
Instead of shielding children completely from money worries, we can teach them to understand why some choices are harder now and how planning helps.
This approach builds resilience and normalises discussions about financial realities — something many adults still find uncomfortable.
Turning Lessons into Habits
Once children grasp the difference between needs and wants, encourage them to track their spending for a week or month.
A simple chart or notebook works:
- List each purchase.
- Mark it as a “need” or a “want.”
- Review together: what patterns do they see?
This exercise helps them recognise spending habits early - a foundation for smarter budgeting later in life.
Apps like GoHenry and Rooster Money even include “saver goals” and spending summaries that reinforce this lesson digitally.
A Piece to Think About
Understanding “needs versus wants” might seem like a small lesson, but it’s the cornerstone of lifelong financial wellbeing.
It teaches children that money is not just for spending… it’s for thinking, planning, and reflecting. By practising this skill early, they’ll be better prepared to navigate life’s financial choices with confidence and care.
Next week, we’ll explore how schools can weave money topics into the curriculum without adding pressure - making learning about finance a natural part of growing up.
Stay with us on this journey - one ThinkPiece at a time!
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