The main difference between needs and wants is that needs are boring and wants are fun, right? Wrong. But good guess. Financial experts say the best way to get in control of your money is to separate needs from wants. But what really qualifies as a need and what qualifies as a want?
Have you ever really paused to think about it? Understanding the real differences between needs and wants will open your eyes and help you see why certain purchases are not beneficial to your financial health or your budget. This concept of needs and wants may seem cut and dry, but it isn’t. When you break down the true meaning of needs and wants, each time you make a purchase you’ll consider how that purchase impacts your financial future. This simple, yet overlooked concept will change the way you approach money forever.
Attaining financial freedom will require you to make small, yet significant decisions with your money each day. If you feel you’ve lost your way, making one mindless spending choice after another, it’s time to pause and go back to the basics. Take a moment to understand the real difference between needs and wants.
Understanding needs and wants
When deciding whether something is a need or a want, start with the basic definitions outlined in economics. A need is something necessary to survive. Without meeting a need, you would be in grave danger or even die. Your safety and health depend on it. If you can survive without something, then it’s not a need. On the other hand, a want is simply something you desire but can live without.
The key thing to remember in making a wise money choice is not only about your comfort in the here and now, but also about your future survival and quality of life. A series of thoughtless money moves will slowly but surely deliver you to the doorstep of financial lack — or even financial ruin. Think of this example. A leaky pipe might only be a minor annoyance for now (maybe some noisy dripping here and there), but if you don’t take care of it, one day it will burst and cause a flood that could ruin your home. Your financial life works the same way. A thoughtless purchase or a declined credit card here and there might not phase you now, but years later you’ll be struggling to pay off high-interest debt when you could be enjoying a comfortable retirement or using that money to buy a home.