Needs vs Wants: Learning How to Make Better Money Decisions

Every human being, literally, makes spending decisions on a daily basis, and understanding the difference between needs and wants helps people manage money better. So what are needs?

Needs are things we need in order to survive and live safely. Take, for example, food, water, and shelter. These needs should always come first in any budget. Without them, our lives will not continue as they are.

What are wants? Things that make life more enjoyable but are not necessary. The expensive brand you want to buy clothes from, video games, fast food, cars, and entertainment. All of these things are not solely bad, but they should always be controlled.

Sometimes, people confuse needs and wants. For instance, calling the latest iPhone you want a need because you really want it!

There is a difference between needing a phone for communication and wanting the newest iPhone.

And also, there is a difference between needing food to survive and eating at a luxury restaurant. This confusion leads to overspending and sometimes more disappointment if those wants are not met.

If someone spends a lot of money on wants, they may not have enough money for needs. Better money management would be spending on needs first, saving some money, and perhaps spending it on wants if possible.

Having healthier spending and saving habits reduces stress and prepares people for emergency times.

So we came up with this rule: Needs first, wants later.

Whenever you come across something you are thinking of purchasing, think to yourself: “Do I really need this, or do I just want it?” This question helps many people make smarter financial decisions.

1. 1Before buying something, ask yourself: “Do I really need this, or do I just want it?”
2. 2Spend on needs first, such as food, water, shelter, and essential transport.
3. 3Save some money before spending on wants.
4. 4Control spending on wants like fast food, video games, entertainment, and expensive brands.
5. 5Use the rule: Needs first, wants later.

• Calling something a need just because you really want it.
• Spending too much on wants before covering needs.
• Ignoring savings and emergency money.
• Thinking wants are bad instead of learning how to control them.
• Confusing comfort and enjoyment with survival and safety.

• Needs are things required to survive and live safely.
• Wants make life more enjoyable but are not necessary.
• Needs should always come first in any budget.
• Wants are not bad, but they should be controlled.
• The golden rule is: needs first, wants later.
• Learning the difference between needs and wants is key to financial independence.