A need is something that is essential for survival, while a want is something that is not essential but that you desire. Some examples of needs are food, water, shelter, clothing, and healthcare. Some examples of wants are a new car, a big house, or a fancy vacation.
Here are some tips for recognising needs vs. wants:
Think about what you would do if you lost your job or had to move to a new city. What would you absolutely need to survive? Those are your needs.
Think about what you spend your money on. Are you spending more money on wants than needs? If so, you may need to make some changes.
Make a list of your needs and wants. Once you have a list, you can start to prioritise your spending.
Remember that it's okay to have wants, but it's important to be realistic about what you can afford.
It is important to recognise your needs and wants so that you can make informed financial decisions. For example, if you need a new car to get to work, you should prioritise saving up for a reliable car that fits your budget. If you want a new car but don't need it, you may want to wait until you have more money saved up or consider buying a used car instead.
It is also important to remember that your needs and wants may change over time. For example, when you are young, you may need to spend more money on education and housing. As you get older, you may need to spend more money on healthcare and retirement savings. It is important to be flexible with your budget and adjust your spending as your needs and wants change.
Recognizing needs versus wants is not about depriving yourself of enjoyment but rather about making conscious choices that align with your long-term financial goals. By striking a balance between these two categories, you can achieve financial stability, reduce stress, and work toward a secure and fulfilling future.
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