Little Newtons Class 11: Needs vs. Wants and Saving in a Piggy Bank

Money is what people use to trade for the things they need and want. Before money existed, people had to trade one thing for another — that is called barter. If you had eggs and needed shoes, you had to find someone who had shoes and wanted eggs. That was hard.

Money makes trading easier because everyone agrees on its value. In the United States, money comes in two forms children see every day:

• Coins — penny (1¢), nickel (5¢), dime (10¢), quarter (25¢).
• Bills — $1, $5, $10, $20 (and more).

Grown-ups earn money by working. Kids can also earn money — for example by doing chores, helping neighbors, or selling lemonade. Money that is earned is money that can be used to buy, save, or share. In this class we will learn how to decide what to do with the money we have.

Every day we ask ourselves, “Do I really need this, or do I just want it?” Learning the difference is one of the most important money skills there is.

• A need is something we must have to live and stay healthy.
• A want is something that would be nice to have but we can live without.

Here are examples that most 1st and 2nd graders can recognize:

Wants are not bad. Ice cream and toys make life fun. But when there is not enough money for both, needs come first.

When money comes into our hands, we always do one of four things with it. Learning these four words gives us a plan for every dollar.

1. Earn — we get money by working (chores, helping, a job).
2. Spend — we use money now to buy something we need or want.
3. Save — we keep money for later, so we can buy something bigger.
4. Share — we give some money to help other people (a friend, a family member, a charity, or animals in a shelter).

Every dollar you get can be split into these four buckets. You do not have to put everything in one bucket. For example, if Grandma gives you $10 for your birthday, you might spend $4 on a book, save $5 for a bigger toy, and share $1 by putting it in a charity jar.

A piggy bank is a safe place to keep the money you want to save. It can be a real pig-shaped bank, a glass jar, a small box, or even an envelope. What matters is that:

• The money stays in one place instead of being lost.
• You can see the money grow over time.
• It is a little bit of work to open it, so you are less tempted to spend right away.

Real banks (like the ones grown-ups use) work the same way. When money goes into a bank, it is protected, it grows a little bit over time (that extra money is called interest), and you take it out only when you really want to use it.

Money you put in the piggy bank is called your savings. Money you take out of the piggy bank is called a withdrawal. Money you put in is called a deposit.

Saving means waiting. You do not spend money right away because you are working toward a bigger goal. A goal is the thing you are saving for.

To make a saving goal you need three things:

1. The thing you want. Draw it or write it down.
2. How much it costs. Ask a grown-up or check the price tag.
3. How much you already have vs. how much more you need.

Example: Maria wants a Lego set that costs $20. She already has $8 in her piggy bank. She needs $20 − $8 = $12 more. If she saves $2 each week from her allowance, in 6 weeks she will have enough (because 6 × $2 = $12).

Saving takes patience, but the feeling of buying something with your own saved money is much better than buying something on a whim.

To know how much is in your piggy bank you have to count your money. It is easiest when you sort first.

Coin values to remember:

How to count:

1. Sort the coins into piles (all quarters together, all dimes together, and so on).
2. Count each pile using skip counting: quarters by 25, dimes by 10, nickels by 5, pennies by 1.
3. Add the piles together to get the total.
4. Every 100¢ = $1. So 4 quarters = $1, 10 dimes = $1, and 20 nickels = $1.

Example: 3 quarters + 2 dimes + 1 nickel = 75¢ + 20¢ + 5¢ = $1.00.

The 3-jar system is a simple way for kids to manage every dollar they earn. You use three jars (or three sections of a piggy bank) labeled:

• SAVE — money for a bigger goal in the future.
• SPEND — money you can use now on small things you want.
• SHARE — money to help someone else or give to a cause you care about.

Every time you get money, you decide how to split it. Many families use an easy rule that is simple to remember:

You can pick any split that works for you. The important part is that every dollar has a job before you get to the store.

Example: Grandma gives you $8 for helping her.

• Half in SAVE = $4
• One quarter in SPEND = $2
• One quarter in SHARE = $2

Total: $4 + $2 + $2 = $8. Every dollar has a job.

Every day you will have small chances to make good money decisions. Here are four habits that grow strong money skills:

1. Wait a day before buying. If you still want it tomorrow, it is probably a good purchase. If you forget about it, it was probably just a moment’s want.
2. Compare prices. The same toy can cost different amounts at different stores. Ask a grown-up to help you check.
3. Check the price and count your money before the register. Never assume you have enough.
4. Say thank you when you buy or receive. Gratitude is part of being good with money and good with people.

Real-life example: You are at the store and see a $5 sticker book. You have $6 in your SPEND jar. You could buy it. But you also remember that in 2 weeks you want to buy your friend a birthday card that costs $4. If you buy the stickers now, you will not have enough for the card. A grown-up decision is to skip the stickers and keep the money for the card.