Needs And Wants: How To Budget For Both
Distinguishing between wants and needs is very important for entrepreneurship and saving money or getting out of debt. Not everything we buy is needed; some are just for pleasure and fantasy. For instance, a smartphone is a need for personal safety, but a smartphone loaded with all the latest gaming is almost assuredly a want.
Most of the time, we interchange needs with wants, and for that reason, I would like to highlight the difference between them here. Stay with me to the end of the post!
What Are Our Needs In Life
Needs are our necessities of life. It is our basic requirements which are extremely important for us to live a healthy life. Most of the time, we interchange our needs with our wants. According to Abraham Maslow’s hierarchy of needs, people are more motivated to fulfill their basic needs before meeting a higher growth level.
The basic needs of life include;
- Physiological needs: It includes water, food, shelter, air, sleep, etc
- Social needs: love, safety, affection, belonging, family, friends, relationship, etc
- Safety and security needs: Safety, security, shelter, employment, health, stability, law, and order, etc
- Self – actualizing needs: Creativity, pursue talent, personal growth, self-fulfillment, etc
Therefore, if needs are not satisfied in time, it may result in illness, inability to function properly, or even death. So, be much centered on your basic needs rather than your wants.
What Are Our Wants In Life
Wants are something we wish or demand to happen in our lives. Wants are defined as something that a person would like to possess, either immediately or later. Our wants are optional; we can live without them.
Moreover, wants may vary from person to person and from time to time. We always crave for more, and our wants will not satisfy us by any means because our wants are unlimited. People have fallen into so many traps and wounded themselves, all in the name of fulfilling their wants.
Some examples of wants include:
- Tv Subscriptions: You don’t need access to thousands of entertainment options through your TV.
- Luxurious Lifestyles: examples of luxuries are cars, diamond jewelry, expensive designer clothing, expensive mobile phones, etc
- Home upgrades: Although some home upgrades can be essential, like a new roof, many renovations are a choice. For example, upgrading an outdated but serviceable kitchen is a luxurious want and not a need.
- Dining Out: While food certainly qualifies as a need, a dinner at a fancy restaurant would be classified as “want.” But what about buying more expensive brands at the grocery store or buying prepared food rather than getting ingredients and cooking yourself?
Difference Between Wants And Needs
A need is something thought to be a necessity or essential items required for life. Examples include food, water, and shelter. A want is something unnecessary but desired or items which increase the quality of living. The table below will help you understand the difference between wants and needs better:
|Needs are those items that are required for life and do not change with time.||Wants are those items that are desired by an individual either right now or in future|
|Needs are important for a human being to survive||wants are not as important as needs, because a person can live without wants|
|Individual needs are limited||wants are unlimited|
|Needs represent the necessities of life.||Wants indicate desires and pleasure of life|
|Needs are something that you must have to live ( Very important things )||Wants are something that you wish to have, to add comforts in your life.|
How To Drastically Cut Expenses
To help you learn how to save money and achieve your financial goals. No matter where you are on your financial journey, distinguishing between wants vs needs is one factor you need to know that anyone can turn their financial life around and start saving money.
Appreciate What You Have
Everything becomes better when you begin to appreciate what you have and already achieved. Think of what you have instead of what you want. You will realize that there are things you can live without whiles living on a budget.
Don’t be too anxious about luxury things; if you think you don’t have the amount to afford, don’t stress yourself to get it at all cost. Don’t let your wants turn into needs, focus on what is necessary for the moment.
Track Your Expenses
Tracking your spending can give you an accurate picture of where your money is going and where you’d like it to go instead. Evaluate your expenses to see whether you’re spending on wants items or needs items. Knowing this will give you a clear picture of how you’re spending most. You can use software like Nerds expense tracker to track all your spending.
Use The 50/30/20 Rule.
The 50/20/30 budget rule is an intuitive and simple plan to help people reach their financial goals.
The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do.
The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.
- 50% on needs
- 30% on wants
- 20% on savings
Final Thought On Wants And Needs
Distinguishing between wants and needs is based on importance; needed items are the necessities of life while wants are for our pleasure. If needs are not met on time, a person’s survival is at stake, whereas wants are something that a person is craving for that does not challenge a person’s survival if not satisfied.
How do you split between wants and needs? Please share your tips with me in the comment section!