Recognizing Money Needs vs. Wants

Interactive Video

[An older couple grocery shopping, smiling at each other. Each one has a bag of groceries.]

Narrator: Have you ever paused to seriously think about stuff you really need versus the stuff you just really want?

[A man viewing an expensive watch on his tablet.]

Of course, you need things like air and water to live. That's pretty clear, right? And we all want happiness and peace. But how about needs and wants from a financial point of view?

[Two circles comparing needs (air and water) vs wants (happiness and peace). A bag of groceries is added to the need circle and tickets to an event are added to the want circle.]

Pop quiz time! Can you tell which things are financial wants vs financial needs? Try sorting the items into two categories: essentials (or needs) and non-essentials (or wants). Select a choice from each drop-down item. 

[Onscreen Text]: 

Option 1: organic fruits and vegetable 

Option 2: medication

Option 3: streaming service

Option 4: new car

Option 5: latest smartphone

Option 6: soda

Option 7: bus pass

Option 8: winter coat

Option 9: internet access

Option 10: work uniform

Guess what? Besides air, water, and food that are essential to keep us alive, there is not one definitive answer. Needs and wants can vary by personal circumstances. Think about some of these examples: If you are healthy, you might not need medication but if you’re someone with a medical condition, that might be essential to keep you healthy.

[A medication bottle appears and moves to the “needs” column with air, water, and food.]

If you live in Maine, a winter coat might be essential to protect you from frostbite in winter but not essential if you live in a warmer climate like Texas.

[A coat appears with a thermometer showing a low temperature and the sun indicating a high temperature.]

If you are a cyber student or work at home, Internet access is essential to learn or work. But if you don’t care about being online, it might not make your needs list.

[An internet router appears, followed by an individual working from home and a hiker.]

The important question to ask yourself is: Does it sustain life in some substantial way or just make life nicer? Now look at some of these items again but with this question in mind. Select each item.

[Onscreen Text]

{Card 1 of 7}

Organic fruits and vegetables: Food is a need, but organic food may be a personal preference.

{Card 2 of 7}

Netflix streaming service: TV entertainment may be enjoyable, but it is a want; there are other forms of entertainment that are free.

{Card 3 of 7}

New car: Transportation is a need for many people, but there may be less expensive options.

{Card 4 of 7}

Latest smartphone: A smartphone might be a need, but a functioning smartphone is practical while the newest version may be a want.

{Card 5 of 7}

Soda from a convenience store: Quick and easy purchases often are wants; cheaper alternatives, such as tap water, meet the need. Or, going to the grocery might be the cheaper option vs. the convenience of a quick stop.

{Card 6 of 7}

Bus pass: You may need to get around; is this a cost-effective way to keep expenses down?

{Card 7 of 7}

Work uniform: Meeting job requirements can be a need to earn a living in certain occupations.

So, financial needs vs. wants clearly vary with everyone’s situation. Maybe the emphasis is more on what is the priority for your money?

[A woman boarding a bus with a bus pass.]

If you prioritize your spending, it helps ensure your most important expenses are addressed first.

[An older couple grocery shopping, smiling at each other. Each one has a bag of groceries.]

In most cases, the most important financial needs are food, rent or mortgage, utilities, transportation, insurance, any clothing and tools needed for work, and savings. 

[A web with a person’s profile image in the center, connected to each need: food, rent, utilities, transportation, insurance, uniform, and savings.]

You might ask: why is savings on that list? Because without savings, you might not be able to afford your needs if something unexpected happens. 

[A man is standing in front of his broken down vehicle on the side of the road making a phone call.]

Prioritizing needs doesn’t have to mean that you must deny yourself every want. [A woman is walking down the street with several bags and smiling.] It just means that what's important comes first and everything else is secondary. [A grocery bag icon and rent icon appear.]