Needs Versus Wants

Written by R. A. Stewart

What is the difference between a need and a want?

To explain it in plain language a need is something we need for our day to day living such as food, shelter, clothing, and utilities, while a want is something we desire but can do without. It is all down to prioritising your spending. 

Even a need is something which you have a measure of control over. We all need clothing but you do not have to purchase the most expensive clothes in order to meet this need. Your local charity shop will be able to supply you with appropriate clothing for a few dollars.

The same applies to food; you can meet this need by taking advantage of the specials in the supermarket and by not wasting food.

Money which is able to be saved by making smart purchases can be put to be used elsewhere. “Better in your pocket than someone else,” as the saying goes.

That does not mean you should just fritter away the money on something which you want.

Some people will try to reduce whatever they spend on a need in order to finance a want, none more so when we are talking about their hobbies and the things they are passionate about. Collectables are a prime example.

When you hear about the collections of some people whether that is dolls, beer labels, or whatever, you think that how can one person finance all of that? Some other area of their personal finances must suffer in order to pay for all of it; that may be travel or retirement savings.

We all have a choice of what we spend our money on at the supermarket and spending that money on good wholesome food is a wise investment. Can you spot any foods on this list that you may leave off your shopping list?

The difference between a need and a want can be subjective; for example a person who is addicted to alcohol, cigarettes, and drugs would categorize these items as needs but these are wants to someone who does not have to deal with these issues.

Needs

Housing

Clothing

Food

Water

Medical needs

Wants

Overseas holiday

Hobbies

Gambling

Expensive clothing

It is important to note that needs vary from one person to another and that your budget needs to be tailored to your own personal circumstances and not copied from someone else’s needs.

Before you spend money on expensive needs such as a vehicle, ask yourself, “What is the least expensive option?”

Purchasing a flash car just to impress your peers and to keep up with the Joneses is a mistake and will cost you in the long run. 

A vehicle may be a need if you require it for transport but it becomes a want if you desire the most expensive model. 

There can be consequences to not having your needs filled. It may result in illness and even death if your medical requirements are not met.

It is all a matter of getting your priorities in the right order and that requires wisdom. You do not have to experience something to know that it is bad for you; you just need to open your eyes and see the experiences of others and learn. 

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MAKING A BUDGET

Establishing a budget is an excellent way of tracking your spending and  you do not need to be struggling with money matters in order to benefit from using a budget. 

Budgets can expose some cold hard home truths

Doing a budget can be the simple solution to rectifying a challenging financial situation but few people do a budget because it exposes spending habits which they prefer to keep hidden. Many people do not want to change their habits despite it costing them an arm and a leg.

There are two parts to a budget.

Your income and your spending.

Your income can be wages from a job, profit from a business, or  income from investments.

Your spending covers everything which is costing you money. 

In short if it makes you money it is income and if it costs you money it is spending.

If you can do some simple maths you will soon discover whether you are left with a surplus or a deficit.

If you have a surplus and you are in debt, use the money to pay off your debt.

If you do not have any debts you can use some or all of your surplus for one or more of your goals; this could be saving for a holiday, saving for a house deposit, saving for a car, or investing it in the sharemarket.

There are so many places to invest your money these days that if you did your homework you will find an appropriate investment for your circumstances.

If you have a deficit you need to take some kind of action rather than try and bury your head in the sand because if you do nothing your financial situation will worsen.

There are two things you can do to balance the books;

1 Reduce spending

2 Increase your income

I don’t know how financially literate you are but if you do not understand financial jargon then I advise you to see a financial advisor to discuss your situation. The public library will have information on where to find a budget advisor.

A budget advisor is unable to help you unless you are completely honest about where your money is going. 

It is up to you to make the decision on which sacrifices you are prepared to make. No one else can make that decision for you.

Your spending can be placed in two categories, your needs and your wants. You may be able to reduce some of the money you spend on your needs but it is the money you spend on your wants which you may find easier to eliminate. 

ABOUT THIS ARTICLE

Feel free to share this article with others. You may use this as content for your ebook or web page. Check out my other articles on www.robertastewart.com

www.robertastewart.com