What Is The Difference Between Wants & Needs? It is a simple concept that can be applied to your finances whether you are working toward financial freedom, debt payoff or simply wishing to teach your children healthy financial choices.
I can’t lie. I’ve thought about (and maybe even fantasized) a lot of things that I want.. and even convinced myself that I NEEDED them (new purse, new car, manicure, pedicure, um… chocolate) after thinking long and hard.. I realized they aren’t things I NEED. They are only things I felt I needed to keep up with the Joneses.
What do you need?
Basic needs for a healthy existence.
Ultimately, there are very few things that are truly needed in life. These are things that are commonly known to keep you safe, healthy and protected.
Shelter from the elements:
- Food to eat and water to drink.
- Clothing to wear.
You can look at these things and see how very truly little you need. However, there are things attached to these that must be considered when focusing on financial freedom, debt payment or planning for retirement. Simply put, you cannot expect to be considered in a healthy environment without running water, electricity, heat and/or air conditioning. That doesn’t mean, however, that you should be living in the largest home with the most expensive accommodations. Food and water don’t have to include gourmet foods, specialty items or coffee from the local coffee shop, but should include at least 3 healthy meals each day for every person in your home. Clothing doesn’t have to be the latest name brand or style, but should be quality and provide protection, warmth and fit well.
Needs include required payments and other protection too.
While you can survive with what is mentioned above, you are still obligated to pay of existing debt. These may have come about due to wants, but they are your debts to pay and thus considered a need. Alongside that are basic things that would be needed to work and live a regular lifestyle conducive to paying off debt and creating financial freedom for yourself.
- Debt and credit card repayment
- Health, Life, Dental and Vehicle insurances
- Vehicle payment for transportation to and from work
- Cell phone or home telephone for communication
- Internet access for work and school purposes (can be found free at many locations)
- Medical expense including medications and co-pays.
Wants are typically things that are truly unnecessary for daily life.
While some things mentioned above may be considered wants (vehicle, cell phone or Internet), for many people they are needs. This is the area we have to focus on what individuals wants are. Most wants are the frivolous expenditures that aren’t necessary for functioning daily life or work use.
- Eating out
- Entertainment like movies, concerts and other family or date night events
- Clothing purchases of brand names, expensive items that have cheaper counterparts, etc.
- Convenience items like laundry service, housekeeper, etc.
- Manicures, pedicures and weekly salon visits
- New or upgraded electronics like game systems, laptops or phones not used for work purposes.
Understanding what the difference between wants and needs is will help you to have a better grasp of what your financial goals should be. You don’t have to eliminate all of your wants to find financial freedom. You do however have to understand that sometimes those wants need to be temporarily eliminated to make room in your budget to pay off debt or put money into savings. Ultimate financial freedom comes from understanding your whole financial picture.
This relates to couponing as well. I no longer go after EVERY freebie or deal. Before I step outside to chase the latest free after ECB sunglass cleaners or trial size aspirin, I think. Does my family need this? or do I just WANT this for the thrill of getting it free after ECB?
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