The Fundamentals of Wants and Needs

Rome wasn’t built in a day and neither were financially-smart kids. The secret to setting your kids up for a solid financial future is to start with the basics. Deeper than the value of a dollar, budgets and why it’s so important to save lies the very basic lesson of: wants and needs are not the same thing. 

While the difference between wants and needs may feel straight forward to grownups, the concept can be complex to kids. Breaking down needs, wants, the fine line between the two and how to make trade-off decisions is critical for instilling money management and financial planning skills. 

Know your needs

Needs are essentials. When teaching your kids how to determine what a need is, it’s important to highlight what is a true necessity and what is a needy request —it’s all about perspective. Here are the categories we consider bare necessities: 

  • Shelter
  • Clothing
  • Food
  • Water

We find that getting as specific as possible when explaining necessities helps kids master the concept and begin to apply it in real-life trade-off decisions. 

Tell me what you want, what you really, really want

If you’re a parent, you’re probably used to hearing the rally cry “I want _____” from your kids. Wants can be described as the things your kids may circle in a magazine or put on an Amazon wish list for the holiday season. Greenlight mom Bonnie Koon even shared that her son once requested $10,000 via his Greenlight app. 

Wants are often inspired by peers, pop culture and hobbies. Here are some hopeful requests made by Greenlight kids. We’ll wait while you have a giggle or two.

When raising financially-smart kids, it’s important for parents to let their kids know that wants are a part of life but making smart choices around those wants will set them up for success. 

The gray area 

No lesson in needs and wants with a child is going to be easy peasy lemon squeezy, so it’s important to get specific for clarity’s sake when dealing with such an abstract conversation. 

Is ice cream a food? Yes, but ice cream is certainly not a necessity. Are Yeezy’s shoes? Yes, but $300 for a pair of shoes is not necessary or a requirement. 

It’s important for parents to let their kids know that it’s okay to want certain things. But making smart choices around those wants will set them up for success. In general, having a discussion around “wanting” things in life can be a powerful and inspirational discussion. You can want to make the soccer team. Want to be president. Want to have a family when you grow up. It is wants and dreams that put humans on the moon and brought us Beyonce. But when it comes to finances – you can’t always get what you want.

Being able to tackle these types of questions head-first will help kids understand the true meaning of a necessity instead of something they very much want, crave or think they need to meet the status quo. 

One way to help kids fully understands wants and needs would be to have them write a list of what they think are needs and what they think are wants. From there, break down needs — if they are a true necessity or not — and tackle what goes into getting a want (such as saving for that pair of Yeezy’s or picking up extra babysitting opportunities to help pay for the spring break trip to New York City). To take it a step further, discuss a budget of $1,000 with your child and include a mix of needs (rent/groceries/phone or car payment) and wants (a new iPhone/concert tickets/new shoes) to showcase that all needs must be met before money goes to wants. 

Want it? Save for it 

Wants and needs make a perfect opportunity to teach the importance of saving money to reach a goal. Want a new pair of jeans? Save for it. Have $100 extra each month after covering necessities? Add extra money to your savings goal to buy a new MacBook. These wants can act as perfect motivators to increase saving.

Setting up clear savings goals with Greenlight will not only teach kids how to set a savings goal and budget to meet their desired goal, but it will motivate them to save more in the long run. We’ll be talking more about saving in November, so stay tuned for tips from Greenlight families on how to have the right money talks.

Save with Greenlight 

Set up a Greenlight savings goal today!

New Year Resolutions & Bright Futures

Studies have shown that financial health is strongly connected to physical and mental wellness. There’s no better time than now to start routines that set your kids up for financially-healthy and happy futures. Let Greenlight help you set new year resolutions that you’ll actually keep to jumpstart your progress.

Resolution #1: We all need a bit of balance (tracking)

Our goal at Greenlight is to make sure all kids are empowered to make financially-smart decisions. We think empowerment starts with knowledge — working with kids to make sure they understand how much they earn, how much they spend and how they should save. 

Tip #1 is all about making sure kids take the time regularly (dare we say it, daily?!) to track their spend history and account balances. This new year resolution will naturally spark conversations around trade-off decisions, teaching your kids responsibility in budget management.

Within the Greenlight app, kids are able to monitor their spending, earning, saving, and giving history. This allows kids (and parents!) to track:

  • How much to expect in allowance
  • How much is available to spend
  • Progress toward their saving goals

“I have two teens (13 & 14). Being able to see their spending and balances digitally via the app has made them much more mindful of how and when they choose to spend their money.”

Antoinette K, Greenlight mom

Resolution #2: Save! Save! Save!

We know it’s hard for kids (especially the young ones!) to understand the difference between wants and needs. Starting kids out with a savings account early can teach them to save for what they want and be prepared to cover what they need because unexpected things happen. 

Consider mapping out a monthly plan with your kids to help them articulate, save for and reach their goals. 

The most popular saving goal for Greenlight kids in 2019 was a car!

If your kids earn an allowance based on grades or chore completion, write out how much each grade or task is worth. That will help them calculate what they need to do to accomplish their goals.

Parents are also able to help their kids reach their goals by setting aside a portion of allowances into their child’s Greenlight save account, helping reinforce wise saving habits.

Setting up saving goals within the Greenlight app helps kids visualize what they’re saving for and regularly track their progress.

Greenlight kids who create saving goals save 29% more than kids who don’t.

Once a week, consider having a family meeting to talk about how close your kids are to reaching their goal. Reviewing their spend history can help kids rethink a plan for the next week on how to spend less and save more. This regular routine can turn into a long-term habit that magically reduces the number of times you get asked for money.

Resolution #3: Watch savings grow with Parent-Paid Interest

After you get your family into the habit of saving, it’s time to learn about how to make your savings grow. Greenlight helps teach the power of compound interest by offering parents the ability to pay a parent-paid interest rate on top of their child’s savings.

On average, Greenlight families set a parent-paid interest rate of 18%. 

Once your kids understand the concept of compound interest, you can set your parent-paid interest rate to a more realistic one and have conversations around what grownup savings accounts typically earn.

Resolution #4: Have you done your chores?

Chore routines can be a great way to show your kids that money has to be earned. A recent poll of Greenlight parents showed that 73% give allowance, and 47% say their kids have to earn it. 

Use the beginning of the year to reassess your family’s chore routine. With age may come new responsibilities, changing the chores typically assigned to your kids.

However, if ever, you choose to reward your kids for chores, Greenlight can help with task management. With the Greenlight app, you can set one-time or weekly chores based on the routines you set for your family. 

In 2019, Greenlight helped kids finish 1.8 million chores!

Parent reviews all chores in one view within the Greenlight app.

If your child does dishes weekly, Greenlight allows parents to assign tasks and regular deadlines. If your child contributes to other household responsibilities by cleaning the gutters once a month, one-time chores may be assigned with an optional monetary reward upon completion.

Whatever your goals, Greenlight is here for you.

Greenlight is here to help your family feel empowered to talk about money and form smart habits with all the tools to raise financially-smart kids. Not a Greenlight member? Sign up today!

Greenlight’s 2019 Year in Review

You did it. You celebrated the birthdays, packed lunches for soccer tournaments and survived the endless conversation about Minecraft. Congratulations, Moms and Dads — you’ve made it through 2019. 

As we look toward 2020, allow us to celebrate the unsung heroes of financial literacy – YOU! The hundreds of thousands of Greenlight parents teaching their kids the value of a dollar and the art of making smart trade-off decisions.

In 2019, Greenlight kids did 1.8 million chores and collectively managed more than $150 million. But that’s not all.

Greenlight's 2019 Year in Review infographic. 
Kids managed $150+ million in 2019.
They set aside $2.6 million to give and did 1.8 million chores.
On average, they spend $91 per month, and 30% of what they spent went toward food and grocery.

Looking toward 2020

In 2020, we’ve got big plans to improve the Greenlight app and add more features for your kids to learn the full-spectrum of money management.

We’ll be weaving more educational layers into the Greenlight app, making it fun (and painless!) for kids to build smart earning, spending, saving and giving habits.

Our team is also building tools for kids to learn all about the world of investing, with a new suite of features that allow kids to invest in multiple funds and even buy fractional shares from their favorite companies.

Our single most important job is to support you – the parents doing the hard work. Together, let’s make 2020 the Year of Financial Literacy.

*Data captured from Greenlight families based on activity from Dec 2018 to Nov 2019. Average monthly spend calculated only for kids who spent.