What is Need and Want in Personal Finances?

Can you see the difference between what you need to survive compared to what you desire to have?

It sounds very harsh when we’re talking about survival when it comes to personal finances. But there are things that we do need to survive. And there are things that are pointless, which we need to feel good about ourselves or get an increased comfort.

Can you tell the difference between the two categories?

What You Can’t Live Without

If you look back at our club-wielding, grunting, forefathers and mothers our needs would be a stream of fresh water, some kind of animal kill, fur to cover their bodies, and a nice, cozy cave to live in.

Fast forward 10 000 years and very little has changed.

It’s said that a need is something you must have to survive. The things we need boils down to stuff like food and water, a shelter (as in a roof over our head), and clothes on our body.

Granted, the fashion and how we get the things today might have changed since our ancestors walked around here.

Of course, there’s a but in this logic. Things we need today might stretch a bit outside of the realm of pure survival.

We struggle with having to decide what fall in the need category today. We have things like insurance, transportation, certain things we could need - like a computer and a phone for our job.

The way you make a difference between need and want effect how you view your money completely. If you're looking to save more money or pay off debt, you need to learn how to decide what's a need and what's a want in your personal finances.

Those things don’t relate to our survival. But they're linked to it. If we can’t get to our job by means of transportation, we can’t make money to put food on the table.

Without food, we can’t survive.

What You Don’t Want to Live Without

On the flip side, you have the things we want. These are things that are non-essential for our survival. But they are things we convince ourselves that we can’t live without.

Some of the things mentioned in the last part of the needs could be wants, depending on the situation. Let’s say you don’t need a smartphone for your job, but you want the get a new one because your old one is getting, well, old.

That makes it a want, not a need.

To combat the urge to buy things you want, you have to be critical about what you actually need. Especially if you’re historically impulsive when it comes to shopping.

The Principle of Wanting too Much

We concluded that we all need to have our cave, or house, to survive. But a house can turn into a want instead of a need, if we’re not careful.

Let me explain.

Let’s say you’re a family of three. We’ll argue that you would need a house with two bedrooms, a living room, and a kitchen. That’s all you need. But our culture today teaches us that bigger is better.

Because of that, and no fault of your own, you’re looking to get a house with four bedrooms, two living rooms, and a pool. With that, you went outside of what your family needs and made the house into a want.

The same can be true about computers, cars, and other things.

What Drives Us When Shopping

I already brushed on this in the example with the house. Every day, we’re hit by loads of different ads and commercials trying to convince us that we need certain things.

We buy into a lot of the crap too, since the companies trying to sell us things appeal not to our thoughts and logic, but to our emotions and our identity.

Companies sell us things that make us think that we need certain items to be a certain person.

When you’re having a bad day and you’re feeling low, it’s easy to spend a wad of cash on the latest lifestyle item you don’t need. To comfort yourself.

This kind of purchase can be anything from smartphones to video games (that’s usually where my impulse buying happens on those days).

If it’s a very bad day, you might even buy that smartphone with money you don’t have. Either by using a credit card or some other form of down payment.

Congratulations, your impulse buying landed you a lower financial freedom for a year or so into the future. All because you were feeling blue.

The next time you feel like buying something on a whim, I ask you to practice the ancient art of sleeping on it.

Sleeping on it will grant you some needed distance to the impulse part of the decision and also push the instant gratification forward. When you wake up, you might realize that you don’t need another kitchen table, because the one you have works fine.

The Vibration of Wanting

Ok, it’s time to get into some slightly more far out things in the want versus need topic. This has to do with the mindset of money and it’s more important than how good your budget is.

When you’re walking around feeling like you’re wanting a bunch of things, you’re also creating the feeling of lacking in your life.

The feeling of lacking will make you focus more on the things you do not have, in terms creating even more feelings of deprivation.

It becomes a negative spiral.

The thing you should be focusing on, even if it’s hard, is gratitude. Be grateful for all the things you have in your life. Even if it’s little things.

I practice gratitude every day and I try to avoid material things altogether. I can appreciate things like great weather, the kindness of a stranger, the things my daughter says, and the love of my wife.

Gratitude puts you in a state of positive energy, instead of the negative energy of wanting (or lacking). Apart from making you happier about what you have, I’ve also noticed that you live more in each moment every day since you’re now looking for things to be grateful for.

When you reframe your mind this way, you’ll be more pleased with what you have and what you accomplish. This in itself leads you to want fewer things in your life.

If you want to read more about how your mindset and vibration can affect the way you attract, or repel, money in your life I suggest the book The Science of Getting Rich. (affiliate link)

The Budgeting of Needs and Wants

We do love our budgets, so we’ll talk a bit about budgeting here too. When you sit down to create a budget, you notice that you usually mix needs and wants in there.

Non-essentials end up in the budget in the form of bills or subscription fees. It doesn’t matter much and I’m not saying you should separate needs and wants in the budget. That’s would be a pain to do.

However, if things aren’t working the way they should, you might want to go over your expenses in the budget. Take a piece of paper, draw a line down the middle and write needs on the left and wants on the right.

See what wants you can live without and remove them from your expenses.

Another thing I want to mention as well is that if you have money to spare at the end of the month and you don’t want to save or anything, make a Wants category in your budget.

In our family budget, we have a category for each family member where we have $50 to spend on whatever we want each month. These can be spent or saved for bigger things later on.

Do you need to learn how to budget better?
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What About You?

Do you think about need versus want when you’re buying something, or do you just buy whatever you feel like? Do you practice gratitude?

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About the Author

I've always had an interest in personal finances and money. Since money is so closely connected to our happiness I want to share what I've learned during the years. My mission is to make things a bit better in the financial area for people who read my post.

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