Needs vs. Wants: Making Smart Choices: First Grade Social

Understanding the clear difference between essential needs and delightful wants empowers us to make smart economic decisions with our money, time, and resources.

The Basic Foundations of Economics

Economics is the study of how people make choices about the things they need and want, how they earn money, and how resources are used. Every single day, you and your family make economic choices. When you stand in a grocery store aisle or look through a toy catalog, you are participating in the world of economics.

+-------------------------------------------------------------+
|                     NEEDS VS. WANTS SPECTRUM                |
+--------------------+----------------------------------------+
|  NEEDS (Essential) | Things required for survival & health  |
|  WANTS (Optional)  | Things that bring extra fun & comfort  |
+--------------------+----------------------------------------+

What Is a Need?

A need is something that is absolutely essential for a human being to stay alive, healthy, and safe. Without needs, our bodies cannot survive or grow strong.

The four universal human needs are nutritious food, clean drinking water, warm and protective clothing, and safe shelter to live in. Medicine and healthcare are also vital needs when people become sick or injured.

                   THE 4 ESSENTIAL HUMAN NEEDS

   [ NUTRITIOUS FOOD ]    Fuel for muscles and brain
   [ CLEAN WATER ]        Hydration for life
   [ SAFE SHELTER ]       Protection from cold, heat, rain
   [ WARM CLOTHING ]      Covering against weather

What Is a Want?

A want is something you would like to have, but do not need to survive. Wants make life more entertaining, comfortable, or exciting, but if you do not have them, your body will still be perfectly fine and healthy.

Examples of wants include video games, ice cream sundaes, designer sneakers, remote-controlled toy cars, amusement park tickets, and comic books. While having these things brings smiles, they are not necessary for survival.

+---------------------+-------------------+-------------------+
| ITEM                | NEED OR WANT?     | REASON            |
+---------------------+-------------------+-------------------+
| Glass of water      | NEED              | Body requires it  |
| Bottle of soda      | WANT              | Sweet, not needed |
| Winter coat         | NEED              | Prevents freezing |
| Roller skates       | WANT              | Fun outdoor play  |
| Nutritious dinner   | NEED              | Energy to live    |
| Candy bar           | WANT              | Sugary treat      |
| Safe home or room   | NEED              | Protection/sleep  |
| Video game console  | WANT              | Entertainment     |
+---------------------+-------------------+-------------------+

How Wants Can Masquerade as Needs

Sometimes the line between a need and a want can seem a little tricky, which is why smart consumers look closely at the details.

Basic Needs vs. Fancy Wants

You need clothes to stay warm and protected from the weather. A pair of sturdy, comfortable sneakers is a need for walking and running safely. However, wanting an expensive brand of shoes with flashing lights or a cartoon character logo is a want. The shoe itself fills a need, but the fancy brand design is a want.

The same is true for food. You need food to nourish your body, but you do not need double chocolate fudge cookies or sugary fruit candies. Eating whole grains, vegetables, and fruit meets your physical needs.

             DISSECTING AN ITEM: NEED VS. WANT

       [ BASIC SHOE ]           vs.          [ FANCY BRAND SHOE ]
       Protects your feet                    Costly lights & logo
          (NEED)                                   (WANT)

Making Smart Economic Choices

Because families and individuals have a limited amount of money and time, they cannot buy everything they see. This economic reality is called scarcity.

Prioritizing: Needs Always Come First!

When a family plans their household budget, they always pay for their needs before spending any money on wants.

First, they pay the rent or mortgage for their home so they have safe shelter. Next, they buy groceries and pay electricity bills so lights and refrigerators work. Only after all necessary needs are paid for can extra money be saved or used for wants like a trip to the movie theater or a family pizza night.

                      THE SMART BUDGET ORDER

    Step 1: Pay for Housing & Utilities    (Shelter Need)
                     |
                     v
    Step 2: Buy Nutritious Groceries       (Food Need)
                     |
                     v
    Step 3: Save Money for Emergencies     (Future Safety)
                     |
                     v
    Step 4: Enjoy Special Treats & Toys    (Wants / Fun)

The Waiting Test for Wants

When you see a new toy or treat that you desperately want, a wonderful strategy is to use the "Waiting Test." Wait three days or a week before deciding whether to spend your allowance on it. Often, after waiting, the excitement fades and you realize you would rather save your money for something truly important.

Exercises and Review

Exercise 1: Define what a need is and what a want is, giving two specific examples of each.

Exercise 1 Solution: A need is something essential that a person must have to survive, stay healthy, and be safe, such as clean drinking water and a warm winter jacket. A want is something enjoyable that a person wishes to have for fun or luxury, such as a remote-controlled toy car or a scoop of chocolate ice cream.

Exercise 2: Why must a family always pay for their needs before spending money on wants?

Exercise 2 Solution: A family must prioritize needs first because needs—like food, shelter, heat, and medicine—are essential to keep family members alive, safe, and healthy. If money were spent on wants first, a family might not have enough resources left to pay for their home or groceries.