Do you know the difference between needs vs. wants when it comes to finances?  There’s a huge difference.

Let’s start with needs.  A need is something you absolutely have to have in your life.  A need could include a place to live, food, utilities, transportation, etc.  You really do need a home, be it a rental or something you own.  Food is also an obvious necessity.   I have included utilities because your home will require power.  You will need electricity and/or gas not only for lights, but for furnaces, stoves, hot water heaters, etc.  Transportation is included as you may need a way to work, doctor, stores, and any other place you go.  Clothing, medical care, and safety can be considered other needs.

A want is exactly that, something you want.  It is not a need although there may be some crossovers.  For example, you may need a pair of shoes, but you don’t need Christian Louboutin shoes. Christian Louboutin shoes are several hundred dollars or more and have distinctive red soles.  A pair of much more reasonably priced shoes would do you well.  You may want to buy a penthouse, but a home in your budget would be just as comfortable.  And, if you have lobster tastes and hamburger money, guess you’ll be eating more meatloaves.   

When I go shopping, I usually spend a lot of time looking, and very little time buying.  If I see something that I really “want”, I determine the price and save up for it.  By the time I have enough cash, the “want” has usually dissipated and I wondered why I wanted it in the first place.  

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