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Do you know the difference between wants and needs? Understanding the difference between the two terms can help you sustain your day to day life while also reaching your financial goals. Not to mention that getting the difference will also help you live a comfortable life. A life where you are contented with what you have.
Many people who fail to understand the difference between these two terms end up accumulating a lot of debt while trying to live a comfortable life. Going for an iPhone, luxury cars, and other expensive things are wants you can live without. You don’t need them to live to fight another day. If you can afford them, that is great. If not, go for other alternatives. And luckily, there are many great alternatives to many luxurious things we go for.
A need is something you need to survive. You need water, food, a certain amount of clothing, and a shelter to live in. Minus these things, you will even find it harder to live another day. But without wants, your life can go on smoothly.
Learning to differentiate between wants and needs will help you to stay out of debt and reach your financial freedom sooner. The crucial thing is understanding that your needs (enough food and water, clothes to wear, and a place to live) are indispensable. You need them to survive.
You also need to understand that a want is everything else. Anything else that you will need to make life a little more enjoyable. And the good news is, you can have a normal life without wants.
That being said, let’s see how you can lower your spending by telling the difference between needs and wants.
Be happy with what you have
Do you have a computer? There are people out there who have never touched one and have no hope of owning one and very happy. The thing is, let what you have to be your source of joy. No matter how small or cheap it is, accept, and be happy that you have it.
Once you accept you are better because you have what is required to survive today, you will find it easy to live a great life while on a budget. Most people who are not happy with what they have end up spending more, and often borrowing to finance a life they cannot afford.
Don’t let your needs turn into wants
Our needs can turn into wants. For example, when you shift to bottled water all the time while you have clean water at home. Or when you stop buying affordable clothes from thrift store Goodwill and opt for expensive clothing from Louis Vuitton. Definitely, you will have turned your needs to wants, and this will hurt your financial goals.
Think before you buy
There is no hard rule that says you must purchase everything you come across. This means you have the freedom to purchase or walk away. Asking yourself questions like the one below can help you make the right decision before buying. Besides, these questions can help you cut clutter in your life.
- Do I need this to survive?
- Why do I need or want this item?
- Do I already have something similar?
Wait before you purchase
Not sure if you need to make a purchase? The best option is going home and thinking about the purchase for at least a day. Doing this not only stops you from buying unnecessary items but also gives you enough time to research the item.
Evaluate what you are currently spending money on
There is a high probability you are currently spending more on wants, making it hard for you to cut back on your budget. Don’t believe it? Go back and evaluate what you are currently spending on. Needs or wants? If wants, you may want to be realistic with your spending and your income. If your budget does not allow you to keep spending on those wants, then it is ok to forget them.