Teens and young adults might think that they need the newest video gaming system or the latest handbag everyone has, but those are the furthest things from "needs". They must be taught that "needs" are only the items that they must purchase to keep them alive or safe, such as food, shelter and basic clothing. Items that they desire are "wants". When we began the PASS program, I sat down with my son to tell him that he had to cut down on his spending. It was then that I realized that he thought that many of the things that he was buying were "needs", or at least important items, and they clearly weren't.
The American Express Pass program that I wrote about last week in my first article in this series, Teens and Money - Cash, Credit or Debit Cards?, has a great section on its website called Money 101. In this section, American Express has partnered with Junior Achievement to help PASS Cardmembers learn valuable information about managing money and financial responsibility. There is even a page on "needs" and "wants". This is a great resource for both parents and teens to read and discuss.
From my experience raising two teens, I saw how very often the new hot thing that everyone wanted seemed like a "need" to them. And many times I did give in and buy it, which probably was a mistake on my part. However, I can tell them that just because something like that isn't a "need" doesn't mean they can never get it. It just might mean they have to sacrifice something else. Or they might have to wait until their birthday or a holiday to get it. We do buy many "wants" also, but we have to think first before we buy them. That is the most important lesson that teens need to learn in spending.
Full disclosure: I am working with American Express on this series of blog posts about the PASS card and I am being paid for my writing. However, my son is using the card and everything I write about our experiences is authentic and my thoughts on the program are real.
See also:
Teenagers and Money - Most Important Lesson to Share?
Teenagers and Money - Teaching Budgeting
Teens and Money - 4 Websites Teaching Financial Literacy
