Need Vs Want
Need vs. Want: Breaking the Spending Cycle
Need vs Want is an ongoing struggle us humans can all relate to. There’s an internal battle between your adult brain and your inner child. The adult cherishes all the important and sensible things such as security, health and shelter, while your inner child – “But Muuum I just want it!” – will crave fun and a bit of excitement to stimulate a desire or dream.
There are essential things we all need, like food, water and shelter. A person could become very unwell or even die if their needs aren’t being met. A want is something we desire to have, that we may or may not be able to obtain.
Do you really need that new smartphone or car, or do you just want it really badly? OK, you could say a phone is essential for staying in touch with family, friends and work, but do you need a top of the range iPhone? The same principle applies to the car you drive. It’s about scaling back where possible and weighing up the pros and cons of opting for something a little bit more premium.
How to tell the difference between needs and wants
Financial needs are essential for you to be able to live and work. Recurring expenses like rent, mortgage payment, utilities or car insurance are needs.
If you’re in a pickle, spending what money you have on the essentials is a no-brainer. If you’re in less desperate circumstances, it’s important to decide what’s best for you on your budget.
- Here’s a short list of some common expenses that fall under needs:
- Utilities e.g. gas, electricity
The things we want are expenses that help you live more comfortably. They’re the things you buy for fun or leisure. You could live without them, but you enjoy your life more when you have them. For instance, food is a need, but flat whites and artisan doughnuts are likely to be more of a want.
- Wants may include:
- Travel and holidays
- Entertainment / going out
- Designer clothes
- Memberships e.g. gym
- Subscriptions e.g. NetFlix, Amazon Prime
- Eating out / coffees
Everyone’s categories will of course be different. And the concept of wants and needs can be psychological as much as financial. So how can you tell the two apart?
If it’s not a necessity, it’s a want.
How to prioritise needs and wants
So how can you discriminate between your wants and needs in your budget? A good start is by writing a list of all your outgoings. Everything from ear buds to a new television. Then, bundle your purchases into categories like insurance, toiletries, internet and phone.
Divide these into two columns: wants and needs. Insurance and a basic phone plan would fall under needs, but an Amazon subscription and private gym membership would fall under wants.
Add up your totals and then align your priorities. A good starting point is around 60% on needs, 20% on wants and 20% on savings or paying off debt. However, this can be adjusted to suit your own circumstances and financial situation.
Anytime you spot something online or when you’re out and about, take a look at your list and see where it fits. The intention of this is to make you more aware of your purchases and help you decide whether you can warrant this particular ‘want’.
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