It is imperative for us to understand the differences between our “Wants” and our “Needs”, also known as our “must haves” and our “can live withouts”. If we do not firmly outline the differences and understand what they are, we will be doing a great disservice to our personal finances. So, what exactly are they? Well… Simply put, our Needs are the essentials that we cannot live without, and I mean LIVE without. Think of needs as being the things required for survival. Our Wants are basically, everything else; they are all those bright and shiny things that may make life a little more enjoyable - but aren’t required for our survival.
“The info graphic below contains a side by side comparison of our Wants vs our Needs. It illustrates the essentials that we need to survive, and compares it to what we may think we need to survive”.
Using the graphic above, I want you to begin to determine exactly what your wants and needs are. Once you have established your own personal wants and needs, you are able to look at your spending habits from a different perspective. When you look at your spending habits from this fabulous new perspective, you are able to clearly see what you need to be spending your money on, as opposed to what you have been spending your money on. This allows you to start from ground zero, and this is exactly where you need to be starting from in order to develop a Spending Plan. A Spending Plan affords you with the ability to see all your current and future financial commitments and lets you know exactly how much surplus there is before you treat yourself to one of those previously determined “Wants”.
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