Many students are managing their own expenses for the first time. If that includes you, you’ve probably noticed that a lot of money management comes down to making decisions. After all, you can only spend money once, so you want to be sure that you make the right choices.
One of the most important money-management lessons you can learn is the difference between wants and needs. In fact, not understanding the difference is one of the biggest reasons people get into trouble with money.
We all have a tendency to say that we “need” things when really just want them. Needs are those things that are essential to our lives, such as housing, clothing, food, and medical care. Meeting those needs is our first priority. Wants are the optional items that we appreciate and enjoy, but can actually live without — like restaurant meals, movies, and expensive outfits.
Before you spend money, ask yourself if what you’re planning to buy is a really a need or just a want. If it really is a need, ask yourself if you need it right now, or if you can delay buying it until you save up extra money for it.
If it’s not a need, ask yourself how badly you want it. It’s okay to treat ourselves to “wants” now and then, but if we get in the habit of always buying what we want, we’ll run out of money pretty quickly. Stores are set up to encourage us to make impulse purchases. Often, if you give yourself 24 hours to reconsider before buying something, you’ll realize that you really don’t want it.
Avoiding impulse purchases and taking the time to ask yourself how badly you want something will help you stretch your money farther, so you’ll have plenty for the things you need.