Needs and wants are two fundamental concepts in personal finance and decision-making that help us prioritize how we spend our money and resources. For more information please visit 89 cash

What Are Needs?

  • Needs are essentials or necessities required for survival and basic functioning.
  • Examples include:
    • Food
    • Shelter
    • Clothing
    • Healthcare
    • Basic transportation (to work, school)
  • Needs are non-negotiable because without them, your well-being or safety could be at risk.

What Are Wants?

  • Wants are things that improve your quality of life but are not essential for survival.
  • They are desires or luxuries that you can live without.
  • Examples include:
    • Eating out at restaurants
    • Latest gadgets or fashion items
    • Vacation trips
    • Entertainment subscriptions (streaming services, video games)
  • Wants are flexible and can be adjusted or eliminated without serious consequences.

Why Understanding the Difference Matters

  1. Budgeting:
    Knowing your needs vs. wants helps you allocate your income wisely. You ensure essentials are covered before spending on luxuries.
  2. Saving & Financial Goals:
    Prioritizing needs allows you to save more effectively for emergencies, investments, or future goals by limiting unnecessary expenses.
  3. Impulse Control:
    Understanding this difference helps avoid impulsive purchases, reducing debt and financial stress.
  4. Better Decision Making:
    It encourages thoughtful spending and improves financial discipline.

Quick Tips to Differentiate Needs from Wants

  • Ask yourself: “Do I need this to live or function daily?”
  • Consider the consequences of not having the item or service.
  • Think long-term: will this expense improve your life meaningfully or just temporarily?

If you want, I can also help with examples or creating a simple budget template based on needs and wants! Would you like that?