Wants vs Needs

Understanding the difference between wants and needs is essential when prioritizing your financial stability. Needs are things you must have for survival. Some of the basics include utilities, food, shelter, and water. However, needs also include things that you need to generate income. For instance, if you are a realtor, you may need suits for work; however, a carpenter does not need those suits. On the other hand, a carpenter may need high-quality tools to efficiently do their job. Therefore, your needs differentiate between who you are and how you generate income. A want is essentially anything else, things you would like to have but do not absolutely need. There are many factors encouraging people to buy their wants that you should look out for 

1. Advertisements - Companies spend billions of dollars on advertisements so you will purchase a product. Just because an ad is telling you that you need something, make sure to truly inquire about the truth behind their statements. Remember, we should only be purchasing our wants after paying our bills, having an emergency fund set up, and allocating 10% of the money left into our long-term savings.

2. Peers - Comparing yourself and your purchasing to your peers is a common and unfortunate part of our world. Just because your friend or enemy has a Stanley cup does not mean that you need one too! You should not feel pressured to live beyond your means to attain a certain status. If you do, you may have a Money Status Money Script. 

3. Personal experiences - Financial habits form early on, and depending on the experiences you have had earlier on, you may not care as much about differentiating between wants vs. needs or vice versa. It is important to analyze your current financial situation and break out of old habits. 

Having good money management means that you will purchase your wants only when you have the money to do so. Without impulsively purchasing your wants, remember to think about how it aligns with your future goals. Will that everyday $7 coffee take you further or closer to your financial goals?