Innocent words have a tendency to take on a life of their own. This happens in many ways. One of the most common is when the more repeat something, the more we believe it – even if it’s not necessarily true.
Take the example of needs versus wants. We’re typically so flippant about declaring things or resources as needs, that we often have trouble sorting through the pile of stuff in our lives that we enjoy and clearly distinguishing between what is an actual necessity – and what is just a strong, earnest want.
What Is a Need, Exactly?
Before you can really tell the difference between a want and a true need, you need to understand the precise definition of a need.
At its most basic level, a need is a requirement for survival. According to this definition, all any of us humans really need is shelter, food, and water. Beyond that? Well, everything else could be classified as a want – or something that is not required for survival.
Yes, We’re Talking about the Fundamentals Here
Theoretically, those of us wanting to improve our finances could, following this line of thought, eliminate every single expense beyond those tied to our basic needs. Imagine how much money you could save if you only paid for housing, groceries, and utilities (which, for the sake of modern times, we’ll throw in instead of just saying “water”). How fast could you pay off your debts or save up to your retirement goal if you only spend your money on your most simple of requirements for survival?
Of course, for most of us, we lead lives that are complex, complicated, and convoluted. We may wish we only had to worry about shelter, food, and water, but circumstances may require us to think about more than having these meager bases covered.
Basic, fundamental needs are just that: they’re fundamental. There’s a whole, very famous hierarchy of needs floating around out there that shows humans do need more. The basics are just the building blocks; other needs are stacked on top of
This doesn’t mean that we should only focus on a basic level of life if we’re looking to improve our finances. If we’re only satisfying our basic needs, we’re only going to be able to function at a basic level – and most of us want to exist (and perform and achieve) on a higher plane.
But it does draw a big, definitive line in the sand for us to at least consider.
How Can Needs Inform Our Financial Decisions?
We can use our improved understanding of needs to help us build better budgets and prioritize our spending.
We don’t need to strip down our spending to bare bones in order to enjoy financial success. What we should do is start with our needs. How much money will we need to cover the basics? How about a level above fundamental?
Be honest with yourself, and with your money. There are varying degrees of comfort and luxury our money can buy – but only you can determine what you personally need to feel comfy and happy. And it doesn’t have to match up with anyone else’s definition of enough. If you are happy living on less, then go for it. Don’t be influenced to spend your hard-earned money by a hyped-up consumerist culture, or people that can’t stop schemimg about how to outspend the Joneses’.
And remember: your future needs matter, too. This means that you must make room for future savings, even if it’s just $50 or $100 per month. Your basic needs 20, 30, and 40 years from now are depending on you to plan for them today.
Once your needs – present and future – are accounted for, feel free to indulge some of your wants. You don’t get to go completely nuts. That’s where the prioritizing comes in. You need to determine what is most important to you, and make sure the money you spend on your wants aligns with your values and what you want out of life.
How well can you distinguish between your needs and wants? Have you prioritized the things you want most, so you can enjoy life now while still saving for tomorrow?
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Learning to distinguish between wants and needs is really important! I have tried to get back to the basics with my budget, and then included things I didn’t really want to live without for an extended period of time, such as my cell phone bill. But, I did work to lower the amount I was paying. I try to think of needs in terms of sanity, too. If something is going to make my life a lot easier, it might be worth the money.
Great point, E.M.! Sometimes things are worth the money – even when they’re not necessarily needs – if it means saving us a significant amount of money, energy, or time.
I think many people mistake wants for needs. There are a lot of things we think we “need”, but we really just “want” them. The more honest you can be with yourself, the better you will at distinguishing between needs and wants. I know personally this was the case when I got myself into credit card debt. I was able to better understand these and as a result, take control of my spending.
I love your point here, Jon – it can be hard to be truly honest with ourselves, but the more honest we are the better we’ll be at getting our finances in order 🙂
I don’t see anything wrong with “wanting” as long as a) you are not deluding yourself by claiming it’s a need and b) it doesn’t detract from long range financial goals. Isn’t this one of the reasons we seek financial independence…to get (or do) some things we want? I think so.
Definitely! We do make money in part to be able to use it to get what we want. But when people are struggling with their finances and have a hard time living without a few things, that’s when it becomes crucial to understand what’s truly important. Like you said, wanting is fine, as long as it doesn’t hurt big financial goals.
If you stay busy, you wont get time to buy the stuff you want right away anyway. After a few days, it is often a forgotten item and you can skip the expense.
I definitely have a problem distinguishing between wants and needs, this article has opened my eyes and I’ll try to work on it! The difference is important, it can save you hundreds of dollars.
great article, thanks a lot!