Needs vs Wants

For most working people who are paid a salary or given a fixed number of hours to work a week, there is not much they can do to increase their income from week to week.  So, like most working Americans, the best way to manage your personal budget is by controlling your expenses.  And the best way to control your expenses is to recognize the difference between “Needs” and “Wants.”

We “need” housing and utilities and clothing and water and healthy food.  But do we really “need” expensive clothes with certain logos on them?  Do we really “need” all those TV channels on our cable bill?  And do we “need” to pay “$2.50 or more for coffee at Starbucks?” 

When Kevin O’Leary from Shark Tank fame was asked if he is a fan of buying coffee everyday, said “Do I pay $2.50 for a coffee?  Never do I do that.  That is such a waste of money.“  Before making any purchase, he asks himself “Do I really need this?  Because if I don’t buy it, then MY MONEY is going to be invested and making more money for me every year even when I am sleeping.”

Here are some other tips from financial advisors:

  1. Avoid the Temptation.  Advertisers are so good at making us want things we don’t need.  Avoid the temptation of buying things you don’t need you by unsubscribing from retailers’ emails.
  2. Make a List.  Before going to any store, make a list of what you need.
  3. Whose Money is it Anyways?  Always remind yourself that YOU earned YOUR money, so would you rather have it in your bank account or somebody else’s?

Did You Know?

Budget Game Tip: For the purposes of this budgeting game, you need to see value in your spending choices and not always choose the least expensive path. Your Quality of Life Score will reward you for spending time with friends and family, studying, eating healthy, having a nicer place to live, and having occasional luxuries.

Now that you know a bit more about managing your Needs and Wants, close this window to continue the game!