So, let’s dive right in and ask ourselves…
What is defined as a ‘Need’ and a ‘Want’ when it comes to spending money?
- Needs can be things you require – we need to spend on items for everyday living.
- Wants can be wishes – ask yourself, do I really need to spend money on this? Could I do without this for now?
When doing a budget you should make sure your needs are catered for and then you can set goals to save for your wants.
Let’s look at a few examples…
- Needs are Necessities, such as food, clothing, rent – we need to spend for these.
- Wants are Desires, even though we need new runners, we cannot afford the branded €200 pair.
Needs are things that you think are essential – It is essential for me to have a car, as there are no buses where I live.
Wants are Things that you think you would like but could do without – I would love to drive a BMW, however I can do without it for now.
What stops getting all we need and want?
- Live ‘within your means’
- Living on a fixed income
- Important basic needs are met
We are all constrained by the money we receive from pocket money or from work at the end of the week.
Most of us have to live ‘within our means’ and this means protecting our money and not spending more money than we receive in income each week.
Most families live on a fixed weekly or monthly income, so it’s important that they manage their money and budget properly.
It is important that all basic needs are met for the home and if possible, some wants. Different households will have different ideas about what is a need and what is a want, however, most will agree that food, shelter, heat, clothing are the basic needs.
Want to learn more?
You can also visit the Global Money Week Official Website for more information.