Needs and Wants

How well can you differentiate your needs and wants?

Generally, needs are essential things that are so important that your life can’t carry on without them. For example, clothes, food, shelter and transportation are everyone’s basic needs. Without them, we will find ourselves starve, cold and difficult to move and you the consequences.

Wants are those desire items that do not even affect our daily life if without them. Items such as annual vacation, watching movies, having karaoke etc are classified as wants items.

As a matter of fact, needs and wants is just a little mind set difference. Yes, we need food to survive. However, we do not need very lavish meal. We need transport to take us from point A to point B but we do not require a BMW to do that. We need clothes to keep us warm but Dior is too much for this. Now you see the difference between needs and wants.

As human have essential needs and unlimited wants while have limited financial resources, proper planning is a must before going broke. In other words, we need to properly allocation our funds to meet our current and future needs first before any wants.

Now, the question is, do you know, for the past, how much did you spend on your needs and wants? Are all you needs fulfilled? Or you have realized most of your wants? The only way to realize this is to record down where you spend your every single cent. You may refer back to my earlier post of Money Management: Bookkeeping for details on how to keep track on your spending.

Only by understand what you have been doing, effective action plan can be carried out to rectify your spending habit. Remember, the bottom line is, to spend on needs and be frugal in wants.

Happy bookkeeping.