Knowing the difference between “needs” and “wants” is an important part of money management that will benefit you for the rest of your life.
Needs are the essentials you must have to survive: food, housing, clothing. In college, you also need tuition, books, and fees.
Wants are nice to have but are not essentials, such as eating out or going to the movies.
Before buying something, ask yourself, “Do I need this, or do I just want it?” You may be surprised at how many things are actually “wants.”
Make two columns on a notebook page. Write down some of your needs in one column—immediate needs and things you’ll need in the next few months. Write down some wants in the second column. Can you see the difference? You can also downoad the Needs/Wants worksheet below for this activity.
If you need to cut spending, are there some “wants” you can do without? Here’s how to find out:
- Decide if you really need or want everything on your list. Are some “needs” actually “wants”? Move those items to the Wants column.
- Cross off the least important "wants".
- Mark items that are particularly important to you.
- Decide if each item makes sense. You may need a car for college, but you may want a brand-new sports car. You can still meet this “need” by buying a fuel-efficient used car rather than a sports car.