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Money: how to juggle between needs and wants

Unlock the secrets to smart money management and effortlessly navigate the world of money and budgeting

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While everyone's wants and needs might be different, there is always a clear line in the sand between the two. When getting to grips with one's personal finance, distinguishing the key differences between the two becomes important.

Needs encompass basic needs like food while wants lean more toward things one desires, like luxury goods. Being able to distinguish between the two, and acting on this, is imperative to one's healthy financial standing. 

In this article, we take a look at these two categories and assist you in differentiating between the two.  

What falls under NEEDS?

The need category looks at living expenses that one needs to stay healthy in their day-to-day living. These include everything from rent to the utility bill, medication and healthcare needs as well as food, commuting, and any work-related expenses. 

These are the basics required by one in order to function, and these should make up the bulk of your expenses. These expenses are also used to determine the amount you'll need when establishing your emergency fund. It is generally accepted that emergency funds should cover six months living expenses.

What falls under WANTS?

‍The wants category is likened to goods we could live without but choose to buy. These are not required for day-to-day living, however, when funds allow they can provide a more enjoyable quality of life. These include vacations, buying a house or car, entertainment, memberships, streaming accounts, etc. 

How to determine needs from wants

While some needs will be glaringly obvious, it's often the case that some wants sneak into the needs category. Here are three simple tools to help you distinguish between the two. 

Form vs function

If in doubt, consider how a product or service will be used. Clothing for instance: if the clothing will be worn to work it falls into the need category, however, if it's a clothing item centered around going out or recreation use, this will fall into the want category. 

‍Embrace brand variety

Needs and wants will differ from person to person, so it's best to have a solid grounding on what falls into needs and wants specifically for you. For instance, if you were looking to upgrade your smartphone, someone working in the tech or digital marketing space might be required to have a certain product, while in other cases getting the latest and greatest will fall into the want category. In this case, it might be best to explore other devices that have a lower total value.

Should you split expenses?

Grocery shops will more often than not fall into the need category, as feeding yourself is essential to survival. However, if the grocery shop consists of wine, chocolate, and other treats, this will fall into the wants category. 

While we don't expect you to scour through each grocery bill, be mindful of what you're spending your money on and try to balance shops between the two. For instance, if you splurge on a grocery shop one week with wants but register it in the needs category, consider adding the next week's grocery bill to the wants category. 

Is saving a want or a need?

Saving for long-term financial objectives like settling debt, retirement plans, and emergency situations might be tough for someone who makes less money. Because these costs are not immediate, they are not always recognized as a necessity.

However, settling debt can be a necessity to ease the financial strain. Furthermore, an emergency may strike at any moment, and during that time, an emergency fund will save one from falling into further (if not crippling) debt. As a result, it's vital to understand that even if your earnings are low, saving is beneficial in the long run, therefore, savings fall into the need category. 

How to navigate spending between wants and needs

Here are two easy steps to help you navigate your spending habits:

Create a budget

Establish a realistic budget and decipher how much you can spend on wants, needs, and savings. By creating a framework you can stick to, you can easily avoid any financial problems and still enjoy a good quality of life. 

A common ratio used in the budgeting world is the 50:30:20 method. Use 50% of your income on needs (rent, food, bills), 30% on wants, and put the remaining 20% straight into your savings.

Be realistic about your wants

If you're looking to save more money or are working on building your emergency fund, consider adjusting your spending on wants. Being more strict with what you can and cannot buy or lowering your standards somewhat can assist you in saving money and rather allocating the funds to a retirement fund for example. Other ways to reduce spending habits are to get a roommate or use public transport. 

In conclusion

Spending intelligently is without a doubt one of the most important ways to make your money go further. The principles, on the other hand, are focused on saving more, spending moderately on necessities, and sparingly on wants. Paying more attention to desires might lead to issues and limit financial development.

Consider carefully what your needs and wants are and then gradually attempt to lower your standard of living. By focusing on your essential needs without disregarding the importance of saving, you'll be on the fast track to financial ease in no time.


This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.


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