3 The
Difference Between Need and Want – Step 1
From a relatively young age, children will use the term “need” when they
“want” something (and the inter-changeability continues well into their teens,
and is some cases beyond). Distinguishing between the two, and then creating an
understanding of the difference is an important starting point. As families we need food, shelter, clothes, basic
medicines, at the next level we need income, insurances etc. We don’t need the
big TV, latest iPad, designer shirts, branded foods, newest X-box, the top of
the range German car or indeed the biggest house, these items (and many others)
fall into the want category. An absolute key point to keep in mind here is that
every company selling products and services on the planet will be marketing to
you and your children that their product is an absolute “need”. They will work
on the desire, the “want”, and then create a list of reasons why you ”need” the
product or service. The peer pressure created just adds to the pressure to
believe that the “want” is a “need”.
Create an understanding of the difference between “need” and “want”
within your off-spring’s mind and you will start the process of understanding.
4 Every
Purchase has an Opportunity Cost – Step 2
Understanding
family finance is finite at some point is an important concept to grasp. Each
item that is purchased potentially creates the loss of an alternative purchase
(the opportunity cost).
Finding
some basic lessons to use to bring this point home will vary depending the age
group you are working with. For youngsters, a trip to the supermarket with you
and a fixed budget to spend. Ask them to decide between two items, such as
which biscuits or cookies to buy. Only one pack of the branded advertised
variety fits the budget, but two packs of the own brand fits. Which will it be?
Is there a taste difference? What happens if we buy one pack of the own brand?
What happens to the money saved? As they understand the concept, it can be
related to other far more important areas than biscuits and cookies.
