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Understanding needs and wants

There does seem to be an ongoing trend, whereby everyone has become consumption-oriented, with many parts of the world preoccupied with thoughts of acquiring “stuff”. What stuff is exactly, depends on who is trying to buy it, but the search for material stuff, or “possessions” as we shall now call them, appears to be driven by the view, or interpretation at least, of success being measured by the number of possessions you own.

The more you have, the more successful you think you will appear. This can include the amount of money you earn or your allowance, the brand of clothes you wear, the type of phone you use, or the car you drive.

We may want to buy anything and everything new in the shops or online, that catches our eye. Perhaps we want the latest fad that our best friend or work colleague has just bought themselves. This modern attitude to want, means we buy things that we simply don’t need, just for the sake of it.

We turn cash into trash at an alarming rate these days!

To gain a good understanding of money, and how to manage it well, we must learn how to distinguish between needs and wants. This will make it much easier to manage your money and budget properly, as will be covered on the budgeting page.

Understanding needs

Everyone has the same basic needs, and we have already explored some of these in the previous page.

We need shelter and warmth in the shape of houses or flats, and so the cost of these, by way of rent, rates or mortgage, is an essential and unavoidable expense. Housing costs are also one of the single largest costs that you will have to pay for each month.

To heat your home with gas or oil, provide electricity for the fridge, Xbox and TV, and water to cook, wash and clean with, you will also need these services, which are called utilities. 

Another obvious need of human beings is to eat and drink. This is not optional or negotiable, or avoidable, you have to eat and drink, and therefore you have to pay for it. The more mouths there are to feed in your household, the more it costs each month.

These needs are the things that we must have in order to survive, things we truly cannot be without. There are also many other things that can be classed as needs for certain people, even though they may not be the needs of others.

For example, some people may need a car to get to work, and if so, they will also need to pay for fuel, insurance, car tax, repair bills, service bills and have an MOT.

Others may be able to get to school, college or work using public transport, and therefore they would need to cover the cost of a bus or train ticket.

Those lucky enough to be able to walk to school or work, do not need any of the above, and so these costs are not incurred.

Understanding wants

Wants can be described as things that we would like to have, but that are not necessary for survival, or day to day living.

The list of wants is truly endless, I could fill this page ten times over with peoples wants, and still, have millions more to list. As an example, here is a shortlist of some peoples wants.

  • Latest-model iPhone & iPad

  • Xbox

  • 50 inch TV

  • Computer games

  • Sports car

  • Motorbike

  • Caravan

  • Luxury holidays

  • Eating out at Gordon Ramsey’s restaurant

  • Diamond necklace

  • Rolex watch

  • Yacht

  • Pet dog

All very nice of course, but not essential needs.

Think about your current situation, and try to identify your own needs and wants.

You must master this skill, as it will become important later in this guide.

 

A bit of both

Sometimes needs and wants can get a bit tricky, and the lines can become blurred.

You may have noticed that buying food to eat is noted in the essential “need” paragraph above, whereas eating out at Gordon Ramsey’s restaurant is also noted as a “want”. So how can eating be both?

This is because although eating is essential to survival, and therefore a need, you don’t have to eat at an expensive restaurant to satisfy that need. You go to Gordon Ramsey’s because you want to eat in a fine restaurant.

Another example of such a scenario is when I had to change my car for work some years ago. I needed a car to get to work, and that need could have been satisfied with a cheap run-around. It would have done a perfectly good job of taking me from A to B, and then B to A again.

 

What I actually bought was a convertible Mercedes. This was “a want” at the time and not an essential “need” at all.

Unsurprisingly, this want of mine cost a lot more than I needed to spend, and it was also totally impractical as a family car!

Your own dilemma of a mixed need and want may take the form of a new mobile phone. Whereas it is quite probable that mobile phones can be classed as a modern-day need, for personal safety, communication and many other uses, you don’t need the latest Apple version 50 with 6 cameras, 10TB of storage, and a shiny gold case.

 

If you do choose this version, it’s because you want to, and not because you need to. (We will deal with keeping up with the Jones’s, in a later part of the website).     

TIP: Next time you are tempted to buy something, think about if the product is a need or a want, and if it is a want, is it really worth it?