Teachable Moment With Kids: Needs vs Wants

My kids and I have a lot of bonding moments at home, especially now that we are in the second year of this pandemic. They have seen its effects, the limitations, and the people that have been due to the virus. This season is also a perfect time to teach the kids financial literacy since our business is affected during this pandemic. Since they were young, I started teaching them about money. As a parent, it is one of the primary life skills children must learn at home to manage their liquid assets properly.

Even in their younger years, I let them use their piggy bank. Any coin that they get changes from the food they buy. They already keep it in their piggy banks. 

But how soon must we teach our kids proper money management? As soon as my kid starts to count and recognize money and when they begin receiving monetary allowances, I should start teaching them the importance of money and how to manage it wisely.

Before teaching our kids proper money management, they have
to learn the difference between needs and wants. The importance of teaching them the concept helps them prioritize their needs in life and later on will enable them to understand their priorities in their adult life better.

Families vary their needs and want. That is why the kids need to learn how to decide which needs and wants of their family. In this pandemic, we classified our needs according to Maslow's Hierarchy of Needs, and the rest are wants. We allow the kids of their desires as long as it fits our budget and is not too much. We give it as a reward for their hard work in school or only on special occasions. That is why they look forward to their birthdays, special seasons, and sometimes weekends because it is where we get to splurge on food in particular. 

In addition to money management, we also teach the kids the importance of understanding the quality of everything we buy to understand the value of money. From the food we eat, the things we use at home, and everything that we buy. Before purchasing something, we need to explain what needs to consider and what factors to consider before buying something. So that early on, they would know how to value hard-earned money. 

This pandemic also is a good teaching opportunity for the kids since it is a test of time. We had to close down our business, our resources became limited, and we all realized that we needed to at least teach the kids the basics in life. Along with it, we need to teach them how to save money. According to financial consultant Fitz Villafuerte suggested one helpful way to do this with your child: the "three piggy banks" approach. He said to put money in three piggybanks. The first piggy bank will contain savings for needs. The second piggy bank will include savings for wants, and the third one for charity. However big or small, we teach the kids how to help others in their simple way. 

Since we are in a digital age and the kids have to adapt to our technology, BDO makes it easy for us to open a Junior Savers Account with an affordable initial deposit and maintaining balance. We can also set up a Junior Savers Plan to help your child grow their savings. It allows you to automatically deposit money from your BDO Online Banking account to your child's Junior Savers account based on a set schedule for transfer and the amount to be transferred.

Teaching the young ones early on how to manage resources properly is a life skill they need to learn from us--their parents. It is best to do it now than later so that it will not be hard for them to understand important matters like this when they grow up. 

How about you? How do you teach your children proper money management?