Needs vs Wants

Let’s begin by defining what exactly is a need and a want?

• Needs can be things you require – we need to spend on items for everyday living. People often refer to their needs as the essentials. The list can be longer if there is a family.
• Wants can be wishes – ask yourself, do I really need to spend money on this? Could I do without this for now? Most people often view these items as extras.

When doing a budget, you should ensure to cater for your needs, and then you can set goals to save for your wants.

Some common expenses that fall under needs include:   

• Food
• Phone credit
• Clothing
• Transport costs

When you leave home, other priority expenses will include :  

• Housing costs (rent or mortgage)
• Gas and electricity

Wants are expenses that help you live more comfortably or something you would like to save to buy.  They’re the things you buy for fun or leisure. For instance, food is a need, but takeaways are likely more of a treat.

Some common examples of wants are:  

• Takeaway tea/coffee, going out for drinks
• Streaming services subscriptions
• Travel, holidays and short trips
• Cinema trips

It is easier to discuss being disciplined with our expenses than doing it. Putting together a simple monthly budget can allow you to see your essential expenses against your monthly income. We can divide the remainder of the budget into savings and small savings for the discretionary funds. To enjoy spending on dinners out or family trips to the cinema.

Learning to prioritise your needs and wants is an important skill to help you take care of yourself and take care of your money.  Spending money responsibly means managing our money well, spending within our means (given our income and needs and wants) and considering the well-being of our planet when making spending decisions. This is what spending responsibly is about!

Check out our MABS website to find handy tools to help you get started, and get in contact with one of our money advisers today!

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Disclaimer: Every effort has been made to ensure this information is current and correct. The details of each case can be unique. As a result, the outcome can be different to what has been described in this blog.

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