Separate Wants from Needs – We just started doing this again. It’s really easy to forget you don’t need everything you’re buying!!
Separating wants from needs is a foundational skill for managing your finances, making smart purchases, and setting realistic goals. Here’s how to do it effectively:
What Are Needs?
Needs are essentials required for survival and basic well-being. These typically include:
- Housing (rent or mortgage)
- Utilities (electricity, water, heat)
- Food (basic groceries, not dining out)
- Healthcare
- Transportation (for work, school, or medical appointments)
- Basic clothing
Ask: “If I didn’t have this, would it negatively impact my health, safety, or livelihood?”
What Are Wants?
Wants are things that enhance your life but aren’t necessary for basic survival. Examples:
- Dining out or takeout
- Subscriptions (streaming, magazines, premium apps)
- Designer clothing
- The latest phone or gadgets
- Vacations
- Gym memberships (when free alternatives exist)
Ask: “Is this something I could live without or replace with a cheaper option?”
How to Tell the Difference
- Use the 24-Hour Rule – Wait a day before buying. Needs usually can’t wait; wants can.
- Apply the “Double Check” Test – If you’re unsure, ask twice: “Is this a must-have or a nice-to-have?”
- Budget Categories – Label your spending categories clearly in your budget (e.g., Groceries = Need, Dining Out = Want).
- Prioritize Long-Term Impact – Needs often have lasting value; wants often provide short-term pleasure.
Why It Matters
- Keeps your savings and debt in check
- Helps you live within your means
- Prepares you for financial emergencies
- Encourages mindful spending