Ever stuck in a situation where you decided to buy something and got confused that you really need it or not? This happens with everyone, Right🤔
Getting temptation to buy new things is a common problem especially amongst teenagers, but understanding the basic concept of Needs vs Wants will make the decision fruitful.
But, firstly, before you buy something ask yourself these three questions:
Does this fulfil my basic needs?
Think of the time when you go to a mall to and you see your favorite brand is running a sale of 50% off. You might not need clothes at the moment, but still you will want to buy it. Here you need to ask yourself ” Does this fulfil my basic needs at the moment?”.
This is not the case every time. Some wants can be needs too. For instance, you are an influencer, you’ll need clothes for your videos. If there is a sale, you will save money too. Basic needs differ from person to person , but remember asking yourself this question will help you take a right decision.
Can I survive without it?
You cannot survive without food and water, but if some of your wants do not get fulfilled, it does not mean you can’t survive without them. If you’re debating a purchase(such as a dress or a brand new earphone) and trying to rein in your spending, ask yourself whether or not you’ll be able to survive without this purchase. You can test this by not purchasing and seeing if you’re thinking about the item a week later.
If the purchase in question does not negatively impact your life if you don’t have it, then it’s easy to tell that it’s a want, not a need.
Will this make me happy for a long time?
Needs very rarely change or differ over time, while wants can be trends that will fade. It is always hard to think when you want to fulfill your wants immediately. Always question if purchasing this right now will make you happy for a long time or if you want it because it’s trendy. These purchases will often make you feel better at the moment but are forgotten about many days later.
Also, ask yourself that if the item will serve its purpose from 2 years from now, then you can think clearly if you want to buy or not.
Today let’s understand the basics of Need vs Wants and try to imply it in our daily lives.
Needs Vs Wants
A need is an essential of daily living, such as clothing, food and shelter. On the other hand, want is more nice-to-have things such as a shoe collection or a nice phone. Wants can make our lives more comfortable or better, but we could still survive without them.
Of course, many purchases fall into a grey area, so these definitions have limitations. For example, most people need a car to get to work or school and run errands unless they access excellent public transportation. Some people want a luxury car, but the need is a basic conveyance that gets you from point A to B.
Food is another grey area. It would help if you ate something, but your food costs change depending on what you eat. Some people eat fast food for every meal. Others are particularly health-conscious and are willing to pay a premium for locally grown, organic produce. If you feel intensely about eating high-quality ingredients, you may choose to save money on other things to afford organic leeks and kale from the farmer’s market. Is this because you want to or because you need to? That’s debatable.
Examples of needs and wants:
Some examples of needs include:
- Gas and electricity.
Some examples of wants include:
- Designer clothing.
- Gym memberships.
- Coffeehouse drink
When you think about purchasing something, examine whether that item is a want or a need. Get an opinion from your parents first and then discuss it. Remember that there is a grey area for many things, and this exercise is more about getting to the why of the purchase than getting to the “right” answer.
Why is it important to understand the difference between a need vs want?
Now, this is the most important question. Well, Understanding the difference between a need and a want is the beginning of building real money skills. When you start analyzing the purchase decisions and evaluate it as per your budget, you are on the way of becoming financially smart.
Let’s understand this by an example. Your dad gave you ₹ 2000 as pocket money for the month of April. You were eyeing on the latest Bluetooth speaker in the market from long. But you had to also buy books to complete your assignment. Books are your “Need” as that is required to complete the assignment whereas speaker is your “Want”.
Sometimes, you can have both – Need and Want. But in real life, you need to budget and save for future. As you move into adulthood, you have to learn to develop a budget and have the self-discipline to realize that paying the rent is a higher priority than an all-inclusive vacation with friends. With practice, you’ll also develop the skills to know how to save for that vacation while still covering your bills.
While parents might take responsibility for certain needs, like haircuts, school supplies, and meals, as a teen you can take the responsibility of paying for your wants. For example, let yourself cover the cost of those trips to the coffee shop or the latest video game. This will empower you to make your own decisions and make you financially smarter.
If you already receive an allowance, ask your parents to give you a monthly allowance instead of a weekly one. That way, you’ll also learn how to budget for what you want over a longer period.
If you grew up in a household where talking about finances was taboo, it isn’t always easy for parents to be transparent with you about money. So when you are learning the difference between a want and a need, start with little conversations. Ask questions about finances. Have them reflect on your values. Is this an item you truly want or something all your friends have? If you want a big-ticket item, like a new computer, research the best choice for their needs, read product reviews, and compare prices before spending the cash.
Role of Budgeting
Everyone wishes to have enough money to buy whatever you need and want. However, this is not the case in the real world. Learning budgeting is extremely important and you need to allocate expenses logically.
Budgeting is essential because it helps you control spending, track your expenses, and save more money. Also, budgeting can help you make better financial decisions, get out of debt, prepare for emergencies and stay focused on your long-term financial goals.
Have you heard of the 50-30-20 rule? The basic rule is to divide up your pocket money and allocate it to spend: 50% on needs, 30% on wants, and 20% on savings.
We have a worksheet for you which can help to follow the 50-30-20 rule. Take a print out of it and start using it every month for managing your budget.
This rule is not an exact science, but if you want to have little fun with your money and achieve your financial goals, this will certainly help.
Budgeting is one of the most important financial habits you can adopt. Between helping you achieve your financial goals and even helping you avoid or get out of debt, there are many reasons to live on a budget. The real question is, why wouldn’t you?
The hack is to remain mindful while taking purchase decisions. As long as you are budgeting, don’t feel guilty of buying things you want. But, you can’t spend the whole pocket money at once in the mall while shopping.
Prioritizing too many wants at one time can be harmful for you in the long run. If you follow the rule of budgeting and save yourself from impulse buying, you will surely feel satisfied at the end of day when you will see the amount you saved.
If you have any questions related to Needs vs Wants, please drop us a mail at firstname.lastname@example.org . Till then, HAPPY BUDGETING😄!!