Needs v. Wants: How You Can Have Both and Still Save Money

If you feel guilty each time you spend money on your guilty pleasures – it’s time to reframe your thinking. Saving money isn’t always about sacrifice, of going ‘with’ or ‘without’. It’s knowing the difference between your needs and your wants – and understanding the ‘why’ behind each expense so you can spend your money intentionally.  

If you’re ready to kick-start a healthier approach to your saving habits – start with your purpose. Here’s how. 

The Difference Between Needs and Wants 

In case you missed your year 9 Home Economics class, the difference between needs and wants is simple: 

Needs – these are items your life, health, and wellbeing rely on. Like, food, water, shelter, electricity, clothing. 

Wants – These are your nice-to-haves, feel-good spends. They won’t affect your survival, but, they might make you sad if you don’t get what you want. Think – gym membership, smashed avocado on toast, the latest iPhone.  

Most people feel guilty for spending money on their wants – but, truth be told, these expenses very likely make you feel happiness and satisfaction. So, to cut them out entirely makes for a very unhappy you (so, you can throw your new savings plan in the bin!). 

Make a List of Your Wants and Needs 

If you want to make a change to your spending and saving habits – It’s time you made a list of your Wants and your Needs.  

1. Draw two columns on a blank page and start tracking your expenses over the past fortnight.  
2. Dig out bank and credit card statements and list each expense in one of the two columns – decide if it’s a want or a need. 
3. Now, add your savings goals to the mix – are you saving for a holiday? New house? New car? Wedding? Where do they fit? 

(heads up) Pretty much everything that isn’t food, shelter, water, and basic clothing will be a want. But, that’s OK. Because it’s more important to understand the why behind those wants – we’ll get to that next. 

Know Your Why 

Is your list of wants drastically longer than your list of needs? Not to worry, I’m not going to be a buzz-kill and tell you to stop enjoying your life. But, if you want to take control of your spending choices, you need to know your why. 

Behind every want is a why.  

Let’s use your choice of residence as an example. 

Say you choose to spend $600 each week renting an inner-city apartment. It’s a bit of a shoe box, but, you enjoy living there.  

Shelter is definitely a need. True. But, a lavish inner-city apartment – well, that’s probably a want, because you can get a bigger unit at half the price elsewhere. 

So then, what is the real need here?  

Why do you live in this apartment? Does it make you feel safer? Is it convenient? Or – is it the satisfaction you get from living a trendy lifestyle? The status? Maybe you need to live 5 minutes from work so you can spend less time travelling and more time exercising? 

Now, go back and note the why behind each of your listed wants. 

Financial Success Doesn’t Always Mean Sacrifice 

Once you understand your purpose for each want, you can work out creative ways to cut back on your spending while still fulfilling your underlying need. 

If you’re seriously trying to save money, then you need to be asking, do I really need this? Do I need to be spending this much money on ‘X’? 

What are the opportunities to cut back on your expenses? 

Using the apartment example – If you decided that convenience is your ‘why’ – then, can you rent somewhere cheaper that is still convenient like, on a train line, for example? Or, can you flatshare? 

You like eating out each weekend because you enjoy the connection with your friends. Can you get take out and eat at home? Arrange a picnic share plate? That $70 dine out meal quickly became $10 – but your why is still being met – you’re connecting with your friends. 

You’ll never stick to a savings plan if you don’t allow yourself to enjoy your life. If you don’t fulfil your underlying ‘why’ – you’ll become demotivated, dissatisfied, and miserable. 

Register Your Interest for My FREE 7-Day Financial Fitness Mini-Course 

Did this post light a spark within you? 

If you’re ready to kick-start a healthier approach to your finances, register your interest for my soon-to-be-released FREE Financial Fitness Mini-Course. In just 7 days, you’ll have the basic tools and systems you need to take control of your money, spend less, save more, and get on your way to achieving your life goals. 

Register your interest here – I’ll send you an email when it’s ready so you can start kicking your goals!