F. Financial Literacy · Money and Finances: Paying, Saving and Smart Choices

Needs and Wants: Making Spending Decisions

F1.3 F1.4 A1About 35 minutes

Learning goals

I can explain the difference between a need and a want.
I can sort purchases into needs and wants and explain my thinking.
I can explain why needs usually come first in a spending plan.
I can explain why something may be a need for one person and a want for another.
I can work out how much money is left for wants after paying for needs.

Words to know

need
Something you must have to live safely and be healthy, like food, water, a home and warm clothes.

want
Something that is nice to have, but you can live safely without it.

priority
Something that is more important, so it comes first.

budget
A plan for how money will be used.

brand
The name a company puts on its products.

Let's start with a story

It's the first snowfall of the year. Kian pulls on his winter coat… and his arms stick out of the sleeves! He has grown. At the store he sees two things he would love: a new winter coat and the newest video game.

His mom says, "We can buy one of these today." Which one should it be?

Most people would say the coat. Kian needs a warm coat to be safe outside in a Canadian winter. The video game is fun, but he can live without it. It is a want.

Needs and wants

A need is something you must have to live safely and be healthy: food, clean water, a home, clothing for the weather, and health care like medicine.
A want is something nice to have, but you can live safely without it: toys, games, candy, a second pair of skates in a cool colour.

💧🍎🧥🏠💊

Needs: water, food, a warm coat, a home, medicine.

🎮🍭🧸

Wants: a video game, candy, a teddy bear.

Needs come first

When money is limited, a smart plan pays for needs first. Whatever is left can go to wants, or to saving.

This is one of the most important key factors when you decide whether to spend.

Worked example

Example 1: Sort them

Sort into needs and wants: milk, a toque in January, a video game, medicine from the doctor, a chocolate bar, a place to live.

Ask: "Can I live safely and stay healthy without it?"
Milk (food): need. A toque in January: need, it keeps you warm. Medicine: need. A place to live: need.
A video game and a chocolate bar are fun, but you can live without them: wants.

Needs: milk, toque, medicine, a place to live. Wants: video game, chocolate bar.

Worked example

Example 2: Needs first, then wants

The Patel family has $70 for groceries this week. Their needs cost: milk $6, bread $4, eggs $5, apples $7, rice $9, chicken $18. How much is left for wants?

Add the needs, making tens where you can: $6 + $4 = $10. $5 + $7 + $18 = $30. $10 + $30 = $40. Then $40 + $9 = $49.
Left: $70 − $49 = $21.
They could buy cookies ($5) and ice cream ($8): $5 + $8 = $13.
$21 − $13 = $8 still left, which they can save.

Needs cost $49, leaving $21 for wants or saving.

A need can be met in different ways

Kian needs a warm coat. But a coat with a famous brand name that costs $150 and a warm coat that costs $60 both keep him warm. The extra $90 pays for a want (the brand), not for the need.

Asking "What do I really need here?" helps you spend wisely.

Worked example

Example 3: Same thing, different people

Is a pair of glasses a need or a want?

Jun can't see the board at school without glasses. For Jun, glasses are a need: he needs them to learn and to be safe.
Maya wants fun glasses with no lenses for a costume party. For Maya, they are a want.
The same thing can be a need for one person and a want for another. It depends on the person's life.

It depends on who needs it and why.

Different people, different needs

Some people need things others don't, like a hearing aid, a wheelchair, special food because of an allergy, or a bus pass to get to work. Respect that other families' needs and choices can be different from yours.

The wait-a-day trick

When you really want something, try waiting a day (or a week). If you still want it just as much, and you have the money after your needs, it may be a good choice. If not, you just saved money!

Just for fun

Your dog thinks a second dinner is a need.

(Sorry, pup. It's a want!)

Hands-on activity

Needs and wants sort

You need: a store flyer or online pictures of items (with a grown-up), scissors, glue or tape, and a large paper folded in half.

Label one half NEEDS and the other half WANTS.
Cut out 12 pictures with their prices. Sort them. For each one, say why.
Put a ? beside any item you weren't sure about. Talk about it with your grown-up. (A coat is a need, but a very fancy coat is partly a want.)
Pretend you have $50. Choose needs first, then add wants. Add the prices in your head. How much is left?

Grown-up note: help with or supervise the scissors.

Your turn

Need or want: winter boots in January in Ontario?

Need or want: a bag of candy?

Need or want: clean drinking water?

Need or want: a new video game?

A family has $60. Their needs cost $45. How much is left for wants or saving?

A plain toque costs $8. A toque with a team logo costs $30. Both are warm. How much extra is paid for the want?

Explain why glasses can be a need.

More practice: warm-up

Need or want: a place to live?

Need or want: a toy car?

Need or want: medicine when you are sick?

Need or want: a second dessert?

Need or want: warm mittens in winter?

More practice: on your own

A grocery list has milk $6, bread $4, eggs $5 and popsicles $7. Which item is a want? How much do the needs cost?

A family has $100 this week. They spend $38 on groceries, $27 on bus fares and $19 on new school shoes. How much is left?

Ella has $30. She needs new indoor shoes for school ($20). She wants a craft kit ($25). What should she buy first? How much more does she need to save for the kit?

Why might a bike be a need for one person and a want for another?

Max says, "I need the newest running shoes!" Is he right? Explain.

Challenge

A family has $50 for food for a camping trip. Needs: hot dogs $9, buns $4, water $6, fruit $8. Wants: marshmallows $5, juice boxes $7, chips $6. Can they buy everything? How much is left?

Jay has $20. His school water bottle broke, and a new one costs $9. He also wants a comic for $7 and a slime kit for $8. What can he buy? Explain.

Explain why it is smart to pay for needs before wants. Use an example.

Check your understanding

Quiz

Which of these is a need?

Which of these is a want?

When money is limited, which should usually come first?

A family has $80. Needs cost $65. How much is left for wants or saving?

Why can something be a need for one person and a want for another?

A warm jacket costs $50. The same kind of jacket with a famous brand name costs $90. How much extra is paid for the brand?

For parents and teachers

What your child is learning: knowing the difference between needs and wants is one of the key factors in spending decisions (F1.3), and it is a big reason why spending and saving choices differ from person to person (F1.4). Children practise sorting, explaining their reasoning (A1), and using mental math to see what is left for wants after needs. Your child may have talked about needs and wants in earlier grades; here it is applied to money decisions.

Common difficulties:

Calling every strong wish a need ("I need that game!"). Ask: "Could you live safely and stay healthy without it?"
Missing that a need can be met cheaply or expensively. A coat is a need; a brand-name coat is partly a want.
Judging others. Some people have needs that others don't (glasses, a wheelchair, allergy-safe food). Talk about this kindly.

How to help: At the grocery store, ask your child to point out needs and wants in the cart. Share a simple version of your own choices, without sharing anything you'd rather keep private. Be sensitive: if money is tight in your family, focus on the skill (needs first, then wants) rather than on what you can or can't afford.