Needs vs wants
Training 45 minutesneeds vs wants
You are 23, a student moving into your first rented apartment. You have $1,200 to set it up and the place is empty. Every purchase goes through one filter: need or want?
Training goal: Cover your needs, plan your wants
▶ Play this trainingSituation
- TV now, mattress later, it is on sale
- Mattress now, the TV later
- Get both on an installment plan
- The $300 set with copper bottoms
- Nothing, there is food delivery
- A basic $60 set and a knife
- Keep the old one, save $30 a month for a new one
- The flagship on a 24-month plan
- Buy the $280 model now
- Buy the scooter, freedom matters
- Take a taxi whenever you are late
- A transit pass and an $80 used bike
What you will learn
- A need is something your health, work or study suffers without
- A need can be met cheaply or expensively: the difference is a want
- Buy wants from savings, not on credit
Your real-life step
Take your last 10 purchases and tag each "need" or "want". Add up what went to wants.
Questions and answers
What is the difference between needs and wants?
Needs are required to live and work: housing, food, transport, healthcare. Wants make life nicer, but you can do without them.
What are examples of needs and wants?
Needs: rent, groceries, commuting, a basic phone. Wants: restaurants, the newest phone, designer clothes, a taxi instead of the bus.
How much should I spend on wants?
A popular guide is the 50/30/20 rule: up to 30% of income on wants. With debt or no emergency fund, aim lower.
More trainings in this module
- What money really is
- Assets vs liabilities
- Personal cash flow
- SMART money goals
- Impulse buying
- The "earn more, spend more" trap
Numbers are illustrative. A game, not financial advice.