Needs vs. Wants

One of the best financial lessons we can ever learn is the difference between needs and wants. The agreed upon needs of humanity our simple: food, clothing, and shelter. Does that mean caviar, high-fashion one-of-a-kind outfits, and million dollar penthouses? Of course the answer is no. Most of us can easily see past that exaggerated example. But when it comes to less obvious questions, although in theory we may know the answer, in practice we all too often rationalize unsound choices.

Do we really need the non-generic brand of peanut butter and the bottled water with the prettier picture on it? Maybe, I don’t know. But those are questions that should be taken very seriously before purchases. Do we really need what we’re buying? Some items we obviously don’t need but we still will purchase, and that’s fine up until a point. Maybe we don’t “need” apples, but that shouldn’t necessarily eliminate them from our shopping carts if we are willing to purchase them in moderation according to our financial circumstances.

Review your shopping habits. Take a look at your recent receipts and identify what you can go without and what you can’t. Alter your budget accordingly and develop the discipline needed to stick to your budget. Find non-monetary ways to reward your good behavior and continue making wise financial decisions.