Maybe what our kids need is a Need.

Alisa Weinsteinby Alisa T. Weinstein

Words are amazing. (So says a writer.) But if you think they take a backseat to numbers in financial literacy, consider these two sentences:

 “I make my seven-year-old pay for her music lessons and school lunches.”

“I let my seven-year-old pay for her music lessons and school lunches.”

One word changes everything. In an instant, a significant financial literacy exercise goes from punishment to gift. And that shift in thinking can make a [future] world of difference.

When Mia started Earn My Keep at age four and a half, we divided her earnings into three money buckets: Saving, Sharing and Spending. By age seven, she had those down pat. So I introduced a new one: Needs. The decision was based on financial, educational and child developmental research. But that didn’t stop folks from looking at me like I had two heads. Why would I ever “make” my kid pay for things that, as a parent, I could/should provide?

Because I didn’t see it as “making” her do anything. I saw it as an incredible opportunity for her to test real-world waters in a nurturing space. And encouraging our children to cover a few Needs can work magic in bringing the infamous Want vs. Need concept to life.

The best part is that adding a Need bucket can be super-simple. You don’t even need extra disposable income to do it. All you’re doing is transferring the responsibility of purchasing the Need from your budget to your child’s.

So, sit down with your kid, and then:

  • Pick a Need that suits him. Does he go to a lot of parties? Need = Presents. Love the movie theater? Need = Tickets. Think haircuts, extracurricular activities, even clothes.
  • Goal-set. How will he fund his Need: allowance? Chores? Earn My Keep? And how will he track his finances? We’re currently using the back of an envelope. No joke.
  • Feel free to point out that the only things humans really need are food, water, shelter and love. And a coat if you plan on venturing outside during a blizzard. Kids are shocked (shocked!) to learn cell phones, cable, even dishwashers are Wants. Paying for a Need is not only a great way to help children grasp this concept, it offers practice on aligning financial decisions with personal values.

And remember: when you offer your kid this kind of responsibility, you won’t grow a second head (at least, thus far I haven’t). You’ll help grow his self-respect, expand his sense of empowerment and strengthen his ability to make decisions for himself.

Now those are words that really add up.

P.S. Curious how Mia and her Needs have been faring? Take a peek!

See Alisa’s latest Kids and Cash commentary on Thursday, February 23rd.

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