Knowing the difference between “wants” and “needs” is an important part of learning to manage money, especially in tough economic times. It’s easy to spend money. What’s not so easy is spending money wisely. One way to help you spend wisely is to separate your needs from your wants, and spend money primarily on your needs.
Wants are nice to have but are not essentials: eating out, going to movies, text messaging, or getting the newest cell phone and ring tones.
Needs are the essentials, the basics of life that you must have to survive: food, housing, clothing. Some expenses that relate to your job (that is, your ability to pay for the basics) also are needs, such as transportation to and from work, and health care coverage to keep you well enough to go to work.
Before you buy something, ask yourself, “Do I need this item, or do I just want it?” You may be surprised at how many things are actually “wants.” Examine the list below and write down whether you think each one is a need or a want.
- A place to live
- Ring
- Lipstick
- Chocolate
- Football
- A good pair of shoes
- Computer
- Toys
- Designer jeans
- Video games
- Ice Cream
- Cell Phone
- Medicine
- Dinner
- Necklace
- Water
- A warm winter coat
- Transportation
- Nutritious food
- A snowboard
