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!

Why kids should understand the difference between debit and credit cards

Today, it’s not surprising that Americans have shifted from the traditional use of cash to more modern methods of payment like debit and credit cards. According to Fundera, 70% of consumers prefer using cards as a form of payment and 54% prefer using debit cards. 

Debit and credit cards provide convenience, more security than cash and are accepted nearly everywhere. It’s safe to say that while cash may not be going away, teaching children the basics of what credit and debit cards are now will prepare them to use cards responsibly in the future. 

Prepare them for the reality of credit cards

A credit card is a form of payment issued by a bank or business that allows the holder to purchase things on credit. When making purchases with a credit card, you promise to pay back the money you owe (plus any interest!) at a later date. 

When you carry a balance over month-to-month, the lender charges you interest on top of the amount you owe. Carried balances and interest can add up quickly and many families find themselves in a position where it’s tough to pay credit cards off.

In fact, 41% of America’s households have credit card debt. It’s important to introduce your kids to the concept of credit cards while they’re still in the nest – that way, they are prepared to carry one later in life. 

When it comes to teaching your kids, we recommend starting their money management adventures with a debit card. This protects them from overspending because they can spend only the money they have, and allows them to build healthy habits early before they enter the world of credit.

Teach them to manage money with a debit card

Debit cards provide more security than cash and fewer worries about debt than a credit card. A debit card is a form of payment that deducts money directly from a bank account to pay for a purchase. With debit cards, owners can have easy access to their available funds and can often also put money aside for something special using a savings account. 

Kids need to learn how to manage a debit card just like they need to learn how to drive. Whether your child runs their own lemonade stand during the summer, starts their first job or gets an allowance, a debit card can help kids learn to manage balances, save money, and more!

How Greenlight helps

Greenlight helps kids learn how to manage money and form strong healthy habits that will serve them as adults. According to Greenlight CEO Tim Sheehan, the reason Greenlight is a debit card is to “help kids learn to effectively manage the money they’ve earned, as opposed to spending money they may not have.”

Parents are the primary account holders and have the controls to choose where their children can use the card, manage chores and allowances, set parent-paid interest rates on savings, and more. Kids are able to monitor their balances, create saving goals, and learn how to make financially-smart decisions in a safe environment with their parents’ guidance. 

How parents send money using the Greenlight debit card.

Mistakes are just mistakes

With Greenlight, there is no chance for a child to overdraft or overspend since we decline any purchases greater than the child’s available balance. Mistakes are just mistakes! Parents get alerts when kids try to spend more than they have to spark conversations about budgeting and wise spending. 

Parents are able to allocate funds to their child’s “Spend Anywhere” account or choose specific stores where kids can spend and how much they can spend. They can even help their child create a savings goal and contribute money to meet that special goal. 

Ready to teach your child how to manage money responsibly?

Join Greenlight today to start adventures in personal finance with your kids!

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!