Needs vs. Wants

You can choose to live one of three ways: beyond your means, within your means, or beneath your means. By having a good understanding of your personal values in coordination with what you consider your needs and wants, you can make decisions that help ensure that you are not living beyond your means and sacrificing your financial security and well-being.

Your needs and wants are personal to you and are dependent on which stage of life you are currently in. Although some basic needs are not up for discussion, the vast majority of your financial outlays carry with them some variability that should be given consideration. A successful and healthy lifestyle includes both needs and wants — but in the right proportion. 

 

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Financial Needs

Your needs are essential to you.  Most of our needs can only be satisfied by the use of our financial resources. Food, clothing, shelter, utilities, and transportation are things that almost every person considers a need. What all of these needs have in common is cost.  For most people, a significant majority of their financial resources are allocated to taking care of these essential needs. Until your needs are taken care of you will have very little room in your budget to spend money on things that you may just want or desire. This is why sound budgeting is so important. If you are utilizing an appropriate budget you should be able to take care of your needs and still have some money to spend on things you enjoy or some items you just want. 

 

Identifying Wants

Our wants are important. Most people will agree that going through life and not being able to do some things that are enjoyable or buy some items that just bring us happiness is not desirable.  Your wants are not silly or useless. They are what bring some satisfaction to our lives. Sure we NEED shoes, but sometimes it feels nice to be able to get the exact pair that we have been eyeing for a while. When you are operating with a high degree of financial literacy and well-being you are able to easily distinguish between your needs and your wants. You will also be able to understand and act upon the fact that in life you can usually have some of what you want but probably not everything you want. 

 

Needs and wants will also be different for everybody.  Maybe you work in a setting that requires business attire. If this is the case then your clothing for work may be more expensive but you will have to treat these expensive clothes as a need since they are a requirement of your job.  For some people, a boat seems like an extravagant expense. But not if you are a fisherman. To be successful financially you have to do quite a bit of thinking about your needs and even more thinking about your wants. What you will find is that if you indulge too often in your wants you will begin to have spending leaks that will impact your ability to take care of the needs in your life. 

 

Learning Checkpoint:

Optional Activity: Identifying Needs vs. Wants Activity.pdf Download Identifying Needs vs. Wants Activity.pdf