What's the difference between Wants and Needs?

 What's the difference between Wants and Needs?

 

Unfortunately, many people understand the difference between a want and a need these days. Maybe that’s because society has become culturally ignorant to what a budget is and the necessity to living within one’s means or even know what financial goals are in this lifetime. Understanding the difference is a life lesson everyone should endure and learn quickly. Because if you don’t learn the difference between wants and needs you will never succeed in life or in the business world.

My father explained it to me in very simple terms and here it is. A Want is the desired thing that is basically a luxury, where a need is considered a necessity like food or shelter.  He also taught me about economics at a very young age and this is how he taught me about budgeting. Whatever your income is, split it in half, one half is your need column and the remainder is again split in half one half goes into savings for that day you need help with your car, or other expense not thought of (emergency fund so to speak) and then the other half of your half can be used as your wants column. Say you want to buy a new laptop. You don’t really need one, but you want one so you can work more effectively, the money for that want would come out of your wants column. I would suggest you split this half into a 30/20 split to ensure you have more going into your savings column instead of wasting it on unnecessary items.

To understand the real difference between wants and needs let's look at it this way. A need is the essential things in life that help you survive. Food, water, shelter, and how about clothes on your back, shoes on your feet. In the clothes and shoes realm, this does not mean spending half your paycheck on a Gucci purse or high-priced sneakers by Nike. That is just a waste of money my friend. You’ll never succeed if you spend money on such things. Oh, your friends might think you’re dripping in cash, but in reality, your drowning in debt as a result of your poor decision because you didn’t buy those things with cash, you put it on a credit card. Ladies and Gentlemen this lesson is called being objective in your definition of a want or a need. It is also a choice we make in managing our money. Why would I bring this up in a life coaching session? It is simple, you can’t achieve your goals if you don’t know how to manage your money properly. You can’t venture out and start your own business if you don’t know how to balance a budget set forth in your future. You can’t plan a marketing strategy if you can’t manage your company budget and forecast what you will need by the end of the year. Are you understanding me so far? Ok good. Let’s continue.

The best way I can help you understand is to have you write down the following categories:

Low-Priority wants a pedicure or manicure  

Low-Priority Needs would be a new pair of shoes

High-Priority Wants a hair cut so you look good for a job or consulting interview

High Priority needs New Suit for same interview

Clarifying the must-have items should-have items, could have items, and won’t have items is a clear way to distinguish what you must have and need have’s in your budget. After you’ve figured out the difference between your wants and needs you’ll be able to fulfill your desired results in the future. Once you’ve built up a strong savings account, you can then begin to imagine a life as your own boss. With money in the bank, your budget can help you realize and make those dreams you’ve envisioned come true and become a reality.

Let’s recap to ensure we understand the difference between a want and a need. A need is an essential item we must have in order to survive and live, home, food, clothes on our back. Some might say we must have health insurance to keep us healthy or maybe a higher education to help us improve our lot in life. Those I consider a personal need to fill our ego, but I do believe in the health insurance to help us save money should we need medical assistance.  Our wants are a totally different ball game. Let’s explore that aspect of life.

Our wants in economic terms are our dream items but in reality, not needed to survive. A Want would be that new fishing boat, luxury car, Gucci handbag, Gucci glasses, Chanel hair clip filled with diamonds, or those Jimmy Cho shoes, or how about that 100-inch television set so you and your crew can watch some game or show with surround sound and amazing technicolor technology. None of these items is a need for your survival, instead, all they are is a drain on your finances and debt enhancers since you’ll be putting them on your charge card with the promise to pay it off later in life. That later in life will never happen because all you’ll be doing is paying the bank that interest fee for the rest of your life, never paying off the balance itself. Therefore, your wants are a dream that will never become reality. Stick with saving that money instead.

 

Author Elizabeth Kilbride is a former political operative, author, scriptwriter, historian, journalist. business professional, and creative artist, and life coach consultant. Ms. Kilbride holds a Masters in Criminology and a BS in Business Management who stepped out of the loop for a while, but who is now back with a powerful opinion and voice in the direction of this country and our economy. As a life coach, she is available to counsel individuals to enjoy their dreams and a better life. Ms. Kilbride loves to travel, photograph her surroundings and is also a gourmet cook who loves to garden and preserve food for the winter months.