Since the beginining of this year, I’ve been doing some volunteer work as a course facilitator with Junior Achievement (a great organization promoting personal finance education and entrepreneurship among elementary through high school students). I’ve enjoyed a great variety of age groups, having worked with 5th graders back in February, 1st graders in April, and then high school juniors and seniors in May. I’ve also visited over 30 elementary school classrooms (1st, 2nd and 3rd grades) to read the Berenstain Bears Trouble with Money book to almost 800 children,. This short and entertaining story illustrates the role of earning, spending and saving money in our lives.
As I usually am, I’ve been so impressed by the students in all these classes. They have a genuine interest at each age in learning about personal finance, which Junior Achievement defines as “the process of managing our goals and needs…” I love that definition. One thing that has stood out to me in all of these classes is that all of the students could identity their physical survival needs and actually differentiate them from their wants. This is something many adults have either forgotten or which they have chosen to ignore.
Here’s what the 1st Graders in my class already knew but what many of the adults in my classes don’t want to consider:
- While shelter is a need, the largest or newest or nicest looking or most-meticulously-pedicured-lawned home on the block is a want.
- Food is a need, but stopping for fast food or to pick up a pizza on the way home from work is a want… even if it’s a 2-for-1 deal or a healthy (less unhealthy?) choice.
- Clothing is a need, but fashion is a want.
- An appendectomy may be a need, but teeth whitening is a want.
What about the following?
- Owning an Xbox One?
- Having the latest iPhone? By the way, sleeping out on the sidewalk for three days before the latest release does not turn it from a want to a need.
- Air Conditioning? Answer this question: how many generations before us survived without A/C? Some among us could answer, “All of them.”
- Grabbing something at the gourmet coffee shop on the way to work?
None of these is a need, yet we act as if they are. We even turn some of our wants into obligations that can cause problems with our ability to pay for our wants. Remember the stories from the Great Recession of the large number of people who were making sure to pay their credit card bills (certainly racked up on wants) while they let their homes (needs) go into foreclosure?
What happens between elementary school and being adulthood? Yes, we all learn the importance of transportation and communication in our lives, but too many of us forget that much of the American consumer experience (ads, marketing campaigns, packaging, and even entertainment) exists solely to make us feel that we NEED things that are actually still just wants. Can we survive without a vehicle? More than half the households in Manhattan do. At the other extreme, only 6% of Boiseans (Idaho) do.
I make the point in my classes that vehicles are not needs but very high priority wants that contribute not to our survival but to our lifestyle. Without a vehicle, we would find a way to survive, but our way of living would likely change dramatically.
The reason I seemingly harp on this point stems from the part of human nature that decides that if something is a need, we can stop looking for alternatives. If my car is a need, then I don’t consider carpooling, public transportation, ride sharing, bicycling, walking, telecommuting, cutting back, etc.
We need to resist the urge to justify overspending on wants if we’re having trouble taking care of our needs. A newer car, a higher rated minivan, a more efficient vehicle, etc. These are all wants that need to be prioritized BELOW eating, paying a reasonable rent/mortgage, and having sufficient clothing to protect us from the elements.
I am often heard to say in my classes that we need to do a better job of educating the next generation (our children) in all things financial. This, however, may be a case where they might do a better job educating us!
Have a great week!