Spending Smart

Every purchase falls into one of two categories:

Needs: Things you must have to live and function

Wants: Things you'd like to have but can survive without

The tricky part: Some things blur the line. You need shoes (need), but do you need the $150 Jordans (want)? You need to eat (need), but do you need to eat out at a restaurant (want)?

A smart spending test: Before buying something, ask yourself:

1. Do I need this or want this?

2. Will I still want this next week?

3. Is there a cheaper option that works just as well?

4. What am I giving up by spending this money?

That last question is called opportunity cost — every dollar spent on one thing is a dollar you can't spend on something else.

Bella the Bear went to the forest market with 5 berry coins. She saw SO many things she wanted — a sparkly rock, a honey jar, a feather hat, and a warm blanket.

"I want everything!" Bella said.

Her dad asked: "Which one do you NEED?"

Bella thought hard. Winter was coming. The blanket would keep her warm. That was a need. The sparkly rock was fun, but she didn't need it. That was a want.

She bought the blanket (3 berry coins) and the sparkly rock (2 berry coins). She got what she needed AND something fun!

Needs are things you must have (food, clothes, a place to live). Wants are things that are nice but not necessary. Smart spenders always cover needs first!