Wants versus Needs — April 2012, reviewed January 2013

Before you go to the mall or a favorite online store, understand the difference between wants and needs.

If it’s possible to delay buying an item, substitute something less expensive, or to use something you already have, the item is probably a want.  Almost every experience and activity, from after-school sports to ‘shopping therapy’ is a want.  There are alternatives to eating out, going to the movies, cable TV, cell phone ring tones, text messaging and new clothes bought just because they’re the new style.

The good news is that the cost of ‘wants’ is completely within your control and you can choose not to spend money on these activities and things.

Needs on the other hand are purchases necessary to survive. They are the ‘gotta haves’. Needs are the items or costs you need to live like a rent or mortgage payment, transportation, utility bill, food and basic clothing. 
Even within this category, however, are different levels of wants and needs.  For example, a car is the most convenient form of transportation but a good, used car will fulfill and ‘need’ but a brand new car will be a ‘want’.

Before you buy something, ask yourself, “Do I need this item, or do I just want it?”  You may be surprised at how many things are actually ‘wants’.  Identifying what are ‘needs’ and what are ‘wants’ can be valuable to gaining control of your financial situation.