When it comes to needs vs. wants, most people know the difference, if they’re honest with themselves. That is, unless the want is so great that they convince themselves that it really is a need.

How often do you catch yourself saying, “I need … a new outfit, a new golf club, or the latest iPhone?” We say it without even thinking, and sometimes we believe it, too.

Young woman at jewelry shop.Needs vs. Wants

A need is something you must have for healthy living. Without it, you would not be able to effectively function in society. Basic needs are the same for everyone – food, water, shelter and clothing. They remain constant across a person’s lifetime.

A want, on the other hand, is a desire for something whether right now or some time in the future. Take, for example, a new car or a designer handbag. Wants differ from person to person, too, and they change over time.

Strangely enough, sometimes a want can turn into a need. For example, let’s say you take a job in an office located outside of the city’s public transportation route. It’s likely that you’d have to purchase a car to commute back and forth every day. Now, a new car would be a want, but a used car could qualify as a need.

How to Tell the Difference

Most people can tell the difference between a need and a want, if they’re honest with themselves. That is, until the want is so great that they convince themselves that it really is a need. In our society, when it comes to money, it seems we often confuse what we require with what we desire.

It would be great to be able to afford everything on our wish list, but for most people, that’s simply unrealistic. We have to learn to say no when we really want to say yes. We have to stop justifying frivolous purchases by fooling ourselves into believing it was a necessity.

Not sure if it’s truly a want or a need? Think about life before the purchase in question. Were you able to survive without it? There’s your answer, like it or not.

Decide for Yourself

Making the right decisions when it comes to your finances isn’t always easy. We’re continually bombarded by the media that often tells us what we need and what we don’t. This coupled with the desire turn wants into needs, it can be tough to transition to a new way of thinking.

That’s not to say that you can’t spend money on a want. You work hard, set goals, save your money and decide what your financial planning allows. When your conscious of your spending, you can separate your needs from your wants more easily. As a result, you’ll be better able to balance your budget and create a better financial future.