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Understanding Needs and Wants

Have you every tried to trick yourself into believing that you "need" something that you just want? Maybe that new iPad that you want is on sale, or you "need" a pair of black shoes to go with your black coat. If you have done this, you are just like most people. The only problem is that most people are out of control with their finances and have no ability to delay pleasure for a greater reward later.

One of the most critical principles to understand on your journey to Financial Freedom is your ability to understand the difference between wants and needs. This can be more difficult than it sounds because it may cause you to think completely differently about the things that you spend money on. Many of us trick ourselves into believing that we “need” to buy things that are actually just wants.

What is a need?

  • Essential for survival, health, or safety​

  • Catastrophic repercussions for skipping needs

  • What will happen if you do not buy food? Or put gas in your car to go to work?

  • ​Ex: Food, water, shelter, basic clothing

What is a want?

  • Makes life easier, more enjoyable, or more comfortable

  • Inconvenience or discomfort is caused by skipping wantsWhat will happen if you do not get your haircut? Or get a new TV?

  • Ex: Eating out at a restaurant, bottled water, luxury condo, brand name clothing

It's time to be honest with yourself. What do I spend money on that I claim is a need? Is it really a need? Or just a want? Look at every item on your budget, ask yourself this question, “What will happen if I skip this item?” “Does not having this item interfere with our health, survival, or safety?”

Buying wants is ok. Life would be miserable if you were never able to get anything that you want. All work and no play makes Jack a dull boy. If all of your needs are met, it is ok to buy some of the things that you want. Just make sure that you can fit them into your budget, and make sure that they fall inline with your main objective - To become financially free. But don’t trick yourself into thinking that you "need” items that you really do not.

Success on this journey is based largely on your willingness to be honest and accountable.

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