Needs vs. Wants

          The difference between meeting the goals of your budget and missing them often comes down to the epic battle of needs vs. wants. Let us be clear; in no way are we suggesting that with a budget you will never be able to have those items in the glorious “want” category. However, it is extremely important to understand whether items fall into the “need” category or the “want” category. Being conscious of your purchasing behavior is a major step toward meeting your budget goals.

NEEDS

  • Food - basic groceries necessary for a balanced diet including grains, fruits, vegetables, dairy, meats
  • Drink - clean water, juice, milk
  • Shelter - live in clean environment, safely and securely
  • Clothing - appropriate for surrounding environment and change of seasons
  • Transportation - simple modes of transportation including public or vehicle with a purpose
  • Communication - family phone plan, email, written letters
  • Media/Entertainment - internet, basic cable, newspaper, books
  • Travel - planned family vacations 
WANTS
  • Food - meals out of the house, junk food, candy
  • Drink - alcohol, soda pop
  • Shelter - excessive mortgage or rent from overextending debt, name brand furniture and decoration
  • Clothing - name brand fashion items, jewelry, short use
  • Transportation - new vehicle models, luxurious features, lease purchases
  • Communication - multiple cell phones, maximum calling plans
  • Media/Entertainment - multiple television sets, extensive cable package, entertainment systems
  • Travel - lack of research, spontaneous tourist destinations
          
          As you examine the needs and wants, you will notice that we understand the society we live in today and do not naively suggest that all a person needs to sustain life is food, water, and shelter. At the same time, it is still apparent that several differences stand out when comparing needs and wants. Needs, for example, encompass those purchases which are often planned for responsibly and reflect the goals set forth in a financial budget. On the other hand, purchases in the want category often reflect those purchases based on impulse, a lack of planning, and the desire to live lavishly or “keep up with the Joneses.” It is excessive spending in the want category that can be detrimental to accomplishing financial goals.
 
Costly Impulse Habits (Wants)
  • 1 basic cup of coffee each workday costs ………………………………………$500-$1,000 annually
  • 5 bar drinks a week costs ………………………………………………………………$650-$1,300 annually
  • 1 order-out lunch each workday costs ……………………………………….$1,250-$2,500 annually
  • 1 pack of cigarettes a day costs ………………………………………………….$1,460-$2,190 annually