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Needs Vs. Wants 101

Updated on August 10, 2014

Financial Education

In America, sadly, the lost art of saving and money managements have become victims of our current thorny monetary crisis and we have no one to blame, but ourselves. The solution begins not just in determining needs vs. wants, but at all times, especially in these times, telling certain brutal truths to ourselves about our personal finances.

First, we all need to review a childhood course, which few schools and most parents failed to include in our financial planning education. It's should have been called:


PREREQUISITE : Both parents and teachers active and on-going participation in this financial education for kids course.

COURSE DESCRIPTION: A presentation of basic financial freedom life skills, with an emphasis on knowing the difference between needs (obvious things that every person needs to stay alive) vs. wants (anything else). This financial literacy course is designed to introduce students to evaluation skills in determining truth in advertisements; determine the level of their wants; and instructs them in ways to say "NO!" when they really want to say "YES!" to their wants, necessary for financial security.

Additionally, students will learn family economics and financial education skills to evaluate what they see, hear, and think about the purchases they will make throughout their lives. They will learn how to live debt free and how to get rid of credit card debt, should they find themselves in an unavoidable financial situation or hard economic times. Successful graduation from this financial education will insure their participation in becoming education finance partners with subsequent generations.

Piggy bank from German bank HASPA, around 1970.
Piggy bank from German bank HASPA, around 1970. | Source

Who Should Take This Course?

RECOMMENDED FOR: Everyone who desires to live above the poverty line and master financial literacy.

However, in a perfect world - the one we don't live in - most of us weren't offered this course. Therefore, as self-learners, with most of us learning financial literacy the hard way, we will need to teach ourselves (and our children) the self-discipline to know the difference between our needs vs. our wants. Essentially, it should be a very simple concept.

Are your needs getting in the way of your wants?

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Slow Economic Times, Rising Costs, Inflation, Foreclosures, and Bank Take-overs

In today's current financial climate, ask anyone around you and they will have a financial tale of woe to share:

  • Their story may be one of debt.
  • Their story may be one of having to cut back on things they used to enjoy, and can no longer afford.
  • Their story may be one about sacrifices they now have to make.
  • Their story may be one of very real fear about a very uncertain financial future.
  • Their story may be one of foreclosure.
  • Their story may be one of losing a job.
  • Their story may be one of a medical crisis forcing them into bankruptcy.

It doesn't matter what the individual story is -- the fact is everyone, inside and outside of this country are worried, concerned, and watchful.

A glass of water, demonstrating the eternal conundrum of whether the glass is half full or half empty.
A glass of water, demonstrating the eternal conundrum of whether the glass is half full or half empty. | Source

Understanding Need -- Just One Basic Need -- Water -- As an Example

On the surface, beyond the basic needs of food and water, shelter, clothing, and some transportation, almost everything else falls into the category of "wants." Where it gets sticky, in American culture, is in the details. Perhaps, part of the problem is that we simply have too many choices. An example of need, would be water - one of life's basic needs. Water is basic? Yes, but.......

Most of us can get our water from the tap. While some (especially those touting the kits for converting your car to run on water), seem to think that water is free -- it's not free. When you hook up to your hose, at some point you it's costing you money. You are either getting a water bill, or you are using electricity to pump that well. Not too many of the hand pumps being used these days.

Additionally, we won't even go into the problems that even if cars ran entirely on water, what price we would pay. Guess, I'm a little skeptical because I live in Florida, where watering your yard is restricted to twice a week. Can't see where 250 million registered vehicles on the road using even more of our precious water is going to make life better or less expensive. (Perhaps, that's a call for someone to write another hub on the practicalities of using water in this manner).

However, getting back to basic needs -- cost-wise water is generally affordable, even for the poorest of American families. However, a huge majority of us choose to buy bottled water on a regular basis. We have our reasons, some of them quite legitimate. So, this is where "need" morphs into "wants."

  • What kind of water?
  • Is the water going to be flavored?
  • How much additional money are we going to pay for it?
  • How far are we going to drive to obtain it?
  • What kind of store are we going to buy it from (regular grocery or convenience store)?

All of these questions are ones we have to ask ourselves and think through. All of these questions also have a want factor involved in the thought process. So, you can see, most other need vs. wants questions, follow the same pattern - they all involve choices that need to be made. Making the best use of your hard earned money, involves being aware of when "need" can be a tight rope walk of "want" that lands you flat on your face on the ground if you are not careful.

The most practical steps that virtually every American can make, is to exercise maturity and constantly make an effort to learn the habit of living on less, regardless of wealth or lack thereof. Moreover, a life lived depending less on materialism in defining our "success in life" and spending more time and effort on that which is real - the things you do, the people you love, making a difference in this world - all ingredients to make the diligence in minding your personal financial "want list" worthwhile.

At what age should you begin to teach your children the difference between needs vs. wants?

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One Part of the Equation of Financial Literacy is Understanding the Power of Advertising


Often people think they need things due to the power of advertising. It's the job of good advertisers try to appeal to consumers in such a way, that the consumers feel they need certain goods or services, when in fact they only want something.

We need to teach our children and educate ourselves about advertising and the tricks of advertising. It's easy to get sucked into believing you need something, that you later discover wasn't the what you really needed.

Teaching Children About Money

The Simplest Questions May Be the Hardest Ones

Do you ever ask yourself when making a purchase?

  • Do I need this?
  • What would happen if I did not buy this today?
  • Would I be any less if I did not purchase this item?
  • Will I want this a week from now, a month from now, or forever?
  • Will buying this, mean I won't have money for other necessities at the end of the month?
  • Is this purchase important enough to sacrifice something else for?
  • Is this a "need" or a "want?"
  • Will I need to make payments on this item? And, more importantly, can I afford the interest?
  • If I purchase this on credit, just exactly how much will it cost me in interest if I only make the minimum payment?
  • If I purchase this on credit, just exactly how long will I be paying for this item?
  • Can this be bought cheaper at another store?

Think before you spend what you don't really have. One good measuring stick for whether or not you should make an non-essential purchase is -- if you can't afford to pay cash for it right now -- you probably don't need it.


Credit Card Debt and Debt in America

  • Depending upon which source you go to for statistics, the average American has between $8000 and $11,000 in credit card debt.
  • What the statistics don't reveal, is that the above figure does not include loans for vehicles. This brings the average American debt at $18,700 per household.
  • Even more shocking, is that this debt does not include mortgages.


Do I Need It or Do I Want It?


Now more than ever, many of us need to do our homework, throw out the old budget (assuming we even had one) and set up a better budget. We need to get real both with ourselves and the other members of our household, and have everyone on the same financial page.

Look over your new preliminary budget and if it does not cover your basic needs, including some modest savings, then you need to plan some drastic lifestyle overhauling.

In such uncertain financial times as we face today, it is more important than ever to pay your emergency savings fund first no matter how much you'd prefer to spend that money on something else.

Needs vs. Wants

How Many Of These Rationalities Apply To You?

1. I feel the need to keep a "certain" image.

2. I don't keep tabs on how much money I have or how much money I spend on a daily basis.

3. I spend money when I know I have a "windfall" amount of money due in soon.

4. I use credit, even when I have the cash for most purchases.

5. I want what I want, and when I see a bargain on what I want -- I can't resist buying now. I'll figure out how I can pay for it later.

6. I was poor as a child, that's why I spend too much.

7. The raise I just got, means I can afford to buy more.

8. Buying things I like, makes me feel good.

9. If I have certain "things" the world will know I'm worthy.

10. I can't say "no" to my kids, my spouse, my friends -- even through I really can't afford to say "yes."

Teaching Kids About Money

What Are You Doing to Combat Impulse Buying?

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    • Volitans profile image


      6 years ago from Seattle

      Good Hub, so many people need to learn this. I might show this to my co-worker, who's in the middle of spending $20,000 he doesn't have to trick out his car. He still has over $6,000 in credit card debt, as well. The sad thing is, I know most of my peers are just like him. Financial literacy is sorely lacking in this country.

    • AllSuretyBonds profile image


      7 years ago

      Great Hub. I agree with you that the reason while a lot of people are in debt is because they can control their "needs" vs. their "wants".

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      7 years ago from United States

      Thanks sbokhari45! Glad I struck a positive thought.

    • profile image


      7 years ago

      Amazing! I never dreamed of this wonderful idea! "Do I really need it or just want to have it". I will start it right from TODAY, whenever I buy something. God Bless you for this "thought provoking thought".

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      7 years ago from United States

      Thanks YlvaJansson! We've all got to watch our money closely or it'll disappear.

    • YlvaJansson profile image


      7 years ago

      Awesome hub. A lot of valuable information and a must have in this day and age when the value of our money has gone down so much.

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      8 years ago from United States

      Thanks scia! We also need to model this for the future generations.

    • scla profile image


      8 years ago from Southern California

      Great article. I think it speaks many truths about how most of us live today. We definitely find it hard to differentiate between needing something and wanting something. Most things are items we want, but we see them as a need. Its hard to start thinking in terms of just needs, because we have grown to almost think that we need something (that is not necessary for living), in order to be happy.

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      8 years ago from United States

      Thanks nwright1080! Thanks MrSpock!

    • MrSpock profile image


      8 years ago

      That first video with the family doing budgeting was great!

    • nwright1080 profile image


      8 years ago from New York, USA

      nice hub!

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      8 years ago from United States

      Thanks thaninja! I was once Queen of silly choices.

    • thaninja profile image


      8 years ago from America

      I have made some silly choices in my day, but luckily now have a positive net worth! I am almost debt free, and will be soon. I just need to buy a house now...but prices are falling.

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      9 years ago from United States

      Thanks Silver Rose! From birth your child watches you, you are their greatest teacher even when you think you are not teaching anything.

    • Silver Rose profile image

      Silver Rose 

      9 years ago from UK

      The bit about how important it is to teach kids about money is true. If you look at the adults who handle money well, they all learned it young, usually from parents. No one learns anything of use from CNBC or the financial magasines. It's examples from parents that have the biggest impact.

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      9 years ago from United States

      Thanks! A lot of us had to learn the hard way. It's still mind boggling that real world math and money aren't a top subject taught in our schools.

      I inter-cut the text with videos to reduce reader fatigue because I tend to be wordy and because some people are visual learners.

    • Bruce Elkin profile image

      Bruce Elkin 

      9 years ago from Victoria, BC Canada

      An excellent approach to teaching people (and kids!) about money. I wish I'd know even some of this when I was a kid. I also liked how you inter-cut the text with videos. Very creative. Thanks!

    • pjdscott profile image


      9 years ago from Durham, UK

      I totally agree with you. The circumstances, as you observe, require sensible, structured action and you show how this may be done. I feel sorry for children and teenagers who don't know any better.

      The financial problem is a global one, so we cn all learn from your sensible suggestions.

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      10 years ago from United States

      Makes you wonder why we don't teach the tools to live successfully starting at an early age to our children. Thanks for the compliment!

    • 02SmithA profile image


      10 years ago from Ohio

      Great stuff! Every person should have to go through some kind of learning process to fully understand how real the difference between needs and wants.

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      10 years ago from United States

      Good blog post, also recommend reading Debt Cure$ by Kevin Trudeau.

    • Adam Guthrie profile image

      Adam Guthrie 

      10 years ago from Shellharbour

      Thank you, this is a really great hup.

      So often we forget the basics when we feel the urge to purchase something such as asking the question - Is this a need? or Is this a want? I agree with the comment that over the past decade or so we have been educated to purchase items with borrowd money.

      I can tell you from first hand experience that its not the way to go - pay with cash is our families new motto. Its helping us dig our way out of the whole we made for oursevelves over the past 10 years by living off credit. If you get a chance visit my <a href="">How Get Out Of Debt</a> Blog.

    • katelyn Grace profile image

      katelyn Grace 

      10 years ago from Las Vegas

      I completely agree with you. I started very early with my kids correcting them every time they said they 'needed' that new toy or game. I would always tell them, "No, you don't need it, you want it. There is a big difference".

    • market solution profile image

      market solution 

      10 years ago from Minneapolis, MN

      What a great hub. There is such a need for this. I am shocked at the lack of understanding in many of the youth (and adults!) today.

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      10 years ago from United States

      Oh yes! Read Rich Dad, Poor Dad a few years ago and it's still one of my favorite books to gift to other people. Thanks!

    • talented_ink profile image


      10 years ago from USA

      This is a really good hub! I don't know if you've read Rich Dad, Poor Dad by Robert Kioysaki because if you haven't, you really need to. Nowadays, too many people spend money on their wants or confuse their wants for needs in just the same way people spend too much money on liabilities and not enough on assets.

    • rb77 profile image


      10 years ago from Las Vegas

      The dumbification of America, teach us how to earn and spend, save and invest a forgotten art. It's been the plan for a while, debt is a way to control populations and they are doing a good job, over 8 billion credit card applications sent out last year, I wonder how many tageted to 25 and under? I have three words for your article, agree,agree,agree....

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      10 years ago from United States

      Raising competent and financially literate children may be better gifts than all the toys and material things money could ever buy.

    • Lazur profile image


      10 years ago from Netherlands

      You're so right. Before my divorce, I could buy anything I want. We both had a job and we had enough money to have a good life. But my ex husband also had a lot of debts. The bank gave him credit to buy a new car and in order to be able to study, he loaned more than 20.000 euro. In total there was a debt of more than 30.000.I didn't want to go on an expensive holiday because of this. I rather spend my money on paying these debts than on raising it.Our children got everything they needed, or rather said, what they wanted. After the divorce things changed. A lot. I couldn't work as much as I was used to because of the children I had to take care of at homeand so the paycheck that came in at the end of the month was a lot less then we were used to.But we made it. I explained the children, took them shopping and showed them how much everything costs. Also the toys they wanted all the time.I didn't buy them anymore. Showed them how to earn money by doing little chores at home and they were thought how to make and fix their own toys.They saved up the money they'd earned and sometimes it took them more than a year to be able to buy what they wanted. But they were so damn proud of themselves then.

    • profile image


      10 years ago

      Good hubs trigger good comments :)

    • Jerilee Wei profile imageAUTHOR

      Jerilee Wei 

      10 years ago from United States

      Great comments! You are absolutely right.

    • profile image


      10 years ago

      You address at least two issues here. First we ourselves must learn to distinguish between need and want and also teach outr children the difference. I also think that we should learn to be content with what we have, rather than look at what we don’t have when it comes to the wants, but that aside.

      Second we need to learn and teach how to budget. Unfortunately we don’t have many good examples. Governments present budget deficits without shame. Banks and resellers are willing to provide us credits. And they tell us that we are stupid if we don’t use credit. I was taught that you can’t spend what you haven’t earned. Society has been teaching us otherwise in the past decade.


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