Good Money Management Means Knowing Needs vs. Wants

I meet people all the time who can’t tell the difference between a need and a want.  In our consumption-crazed world, virtually everything has become a need. And with the ease of a credit card swipe we can turn every need into a purchase.

What are needs?

Let’s clarify, shall we? Needs are the things we must have to keep body and soul together. You need a roof over your head, you need food in your belly and you need to get to and from work so you can make money. You also need to save for the future, get out of debt and make sure your butt is covered in case the caca hits the fan.

What are wants?

Wants are the things we really like. While we need a home, we want one with a spiffy kitchen with granite counters and stainless steel appliances. While we need food, we want the steak, twice-baked potatoes and garlic bread.

Know the Difference

Are you one of the people who claim that they need a vacation? Do you need a full-out cable package? How about that smart phone? If you simply can’t imagine your life without all the extras you’ve come to know and love, you’ve lost track of what a need really is.

Of course, never getting any of the good stuff is a bummer. Wants are fine. It’s not a matter of only satisfying your needs and leaving all your wants to wilt from a lack of attention. I’m all for satisfying wants. It’s a matter of making sure your needs are dealt with first, and then looking to your wants.

Find yourself scrambling to cover your bills? It may be that your wants got in the way of your needs. Spend time in overdraft every month? You may have a needs/wants problem. Credit card or line of credit balances going up? Your wants may be getting the better of you.

Okay, so you’re sick of scrambling and you want to change how you’re dealing with your money. But no matter how many times you try using a spending journal or living with a budget, you fall off the rails. Ugh!

If you want the changes you’re making to stick, you must be able to identify at least one benefit you’ll gain by making those changes.

No two people are motivated by the same thing. I like having piles of money in the bank so that if anyone screws with me, I can tell ‘em to take a long walk off a short pier. That’s why I call my emergency fund my FU Account. If I don’t like what’s happening, if someone tries to make me compromise my vales, I just tell them FU! I can do that with confidence because I’ve forgone the snappy shoes, the latest gadget, and the snazzy appliances to have money in the bank instead. I know what’s really important to me.

Do you know what’s really important to you?

Exercise: Make A List

1. Grab a pen and piece of paper and write down the things that you consider the most important. Don’t just write down what you think will make a good list. Be honest about what you want. Write down the things that really matter to you.

What makes you happy? What defines who you are? Where do you wish you were in your life? You may have to come back to your list a few times. Think. Jot notes. Think some more.

2. Next, write down the goals you want to achieve over the next year, two years, and five years. What do you want to accomplish? Write down everything you can think of.  Everything.

3. Pick three things you think are most important from your list. That will mean ranking those goals 1, 2, 3 in terms of importance, and then going back, pulling all the things you labeled with a “1” and ranking those 1, 2, 3.

4. Now compare your goals to what’s really important to you. If you ended up with “vacation” on the top of your goals list, but “living debt-free” was really, really important to you, you’re going to have do some more thinking. You’ll have to resolve those conflicts so you are sure where your priorities lie.

Knowing what you want will help keep you focused and on track. If you slip off track, don’t beat yourself up. Update your spending journal and get back to working towards your goal.

Category: Budgeting | Tagged in: ,

Mar 11, 2015


About Gail Vaz-Oxlade

Gail Vaz-Oxlade is the Gemini-award winning host of Til Debt Do U$ Part, Prince$ and Money Moron. She hosts The Monday Night Late Shift on NewsTalk1010 where she talks about life, the universe & everything. Gail blogs daily at and contributes to Gail is determined to eliminate financial illiteracy in Canada, and encourages people to join to raise their Money IQ. Her books include: Debt-Free Forever, Easy Money, Never Too Late, Money-Smart Kids, It’s Your Money, Money Rules and Saving for School. You can also follow her on twitter @GailVazOxlade.

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