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Needs Versus Wants: The Great Spending Debate

by Kelly Whalen on February 25, 2010. Consumer View Comments.

This article is presented by Kelly Whalen, Consumerism Commentary staff writer.

It’s fairly straightforward to figure out the difference between a need and a want. Needs are basic: food, shelter, clothing, water, warmth. We can also add to that our emotional needs: love, friendship, and care.

Wants seem easy to define. Wants are all the extras, the things that are not necessities. No one “needs” the latest gadget, the most expensive pair of running shoes in the store, or the biggest house on the block.

When it comes to actual purchases though the waters seem to get murky. Is a new pair of shoes a necessity or a want? The answer to this question depends on many factors. You would probably want to know what kind of shoes are being considered, how many pairs of shoes the person already has, whether they’re replacing another pair of shoes, and the answers to a dozen more questions. This evaluation of needs versus wants takes time.

We may go through days without having to make spending decisions, but throughout our lives we make tens of thousands of these decisions. Whether they are small purchases like a pack of gum or large ones such as our homes, we are faced over and over again with the question, “Do I really need this?”

If you are asking that question, you are already practicing smart spending habits. “Do I really need that?,” is only the tip of the iceberg though. We can build on that question to make a checklist that will help keep more money in your pocket.

shopping cartsThe situation where this often becomes useful is when you are shopping for something, perhaps groceries or a birthday gift, and you see a widget you have been thinking about buying. You look at the widget in passing or may even stop and pick up the widget off the shelf while you make a decision. Here are the questions you need to ask yourself before you put that widget in your shopping cart.

  • Is this widget on my list? If it isn’t, put it down and write it on your list for future purchases. If you aren’t shopping with a list, start! Lists are a great way to keep track of all the things you need and want. If it’s on your list you can continue.
  • Do I need this widget? No justifications here. Is it an absolute have-to-have-it item? If you said yes, buy it. If you said no, continue to the next question.
  • Can I afford this widget? If you answered no, put the credit card back in your wallet and back slowly away. If you answered yes, continue to the next question.
  • Do I want to spend my money on this widget? Are there better things you could be spending your money on? Is there a goal you have in mind? For me the idea of being debt-free is much more appealing than the widget I am considering. You may have a goal in mind such as a new home or a vacation with your family, so while the question might be easy to answer, it will depend on what your individual goals are.

Taking a few moments to evaluate our purchases while making them is crucial to maintaining a healthy balance of spending and saving. Using this checklist will only take a few seconds, but it could be the difference between a decent net worth and a fantastic one.

As a mom, I am faced with purchasing decisions not just for myself but for my family and household as well. Using this checklist has stopped me from overbuying, overspending, and buying things I don’t need.

How do you keep yourself in check when you are spending money? Do you use a checklist or evaluation process?

Photo: robholland

Tagged as: Consumer, needs, Shopping, wants

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About the Author

Kelly is a mostly stay-at-home mom to four kids. You can more of her articles about personal finance at The Centsible Life. Also, you can follow Kelly on Twitter.

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  • steveDH

    Using savings goals worked for me. That prioritized the “wants”. They also masked the checkbook balance so I had to reach for the credit card which always – fortunately – was personally distasteful. Back when a 40 megabyte hard drive (read Widget) ran $350 if I didn’t have the money in the checkbook I could pass on the purchase with little problem. I might go home and add a “widget savings goal”, but that was a process that we could live with, and it kept us out of debt.

  • steveDH

    Using savings goals worked for me. That prioritized the “wants”. They also masked the checkbook balance so I had to reach for the credit card which always – fortunately – was personally distasteful. Back when a 40 megabyte hard drive (read Widget) ran $350 if I didn’t have the money in the checkbook I could pass on the purchase with little problem. I might go home and add a “widget savings goal”, but that was a process that we could live with, and it kept us out of debt.

  • http://www.TheFrugalityGame.com/blog David J. Garcia

    It’s the age old question (needs vs. wants). As someone who really likes widgets, though, I like how you framed it.

    This is a great process. If it’s not on the list, I can consider adding it to the list for later, but not buy it now.

    That last question saved me recently. I was looking at cheap speakers (on my list), and found a more expensive set (and a really good deal). While I didn’t need them, I really wanted them, and I could afford it. Fortunately, however, I asked that final question and remember that I had other things I’d rather spend my money on.

  • http://www.TheFrugalityGame.com/blog David J. Garcia

    It’s the age old question (needs vs. wants). As someone who really likes widgets, though, I like how you framed it.

    This is a great process. If it’s not on the list, I can consider adding it to the list for later, but not buy it now.

    That last question saved me recently. I was looking at cheap speakers (on my list), and found a more expensive set (and a really good deal). While I didn’t need them, I really wanted them, and I could afford it. Fortunately, however, I asked that final question and remember that I had other things I’d rather spend my money on.

  • http://www.learnvest.com Allison

    This is very well-explained; I really like the way you’ve broken up the innuendos needs v. wants, since it’s easy to say, “I don’t NEED it, but I sort of could use it, so now what?” Another way to think about the problem, maybe, is to categorize your purchases.

    If, say, x% of my net income is allocated to groceries and so far I’ve been doing really well on my spending in that category, then maybe it’s okay to buy that fancy manchego cheese after all (as long as my other categories are on track). Similarly, you can do the math to figure out whether this item would fall under your non-budgeted disposable income. Here’s one budget calculator that I think is useful, as it shows you how much disposable income you have at the end: link

    Let me know if you think it’s useful!

  • http://www.learnvest.com Allison

    This is very well-explained; I really like the way you’ve broken up the innuendos needs v. wants, since it’s easy to say, “I don’t NEED it, but I sort of could use it, so now what?” Another way to think about the problem, maybe, is to categorize your purchases.

    If, say, x% of my net income is allocated to groceries and so far I’ve been doing really well on my spending in that category, then maybe it’s okay to buy that fancy manchego cheese after all (as long as my other categories are on track). Similarly, you can do the math to figure out whether this item would fall under your non-budgeted disposable income. Here’s one budget calculator that I think is useful, as it shows you how much disposable income you have at the end: link

    Let me know if you think it’s useful!

  • http://www.thecentsiblelife.com Kelly

    I agree-I hate writing things down. Especially if you add one of my kids to the mix! I love your approach to saving for even the $350 widget!

  • http://www.thecentsiblelife.com Kelly

    I agree-I hate writing things down. Especially if you add one of my kids to the mix! I love your approach to saving for even the $350 widget!

  • http://www.thecentsiblelife.com Kelly

    That’s exactly the point, David! Sometimes we talk ourselves into things when we are in that moment, but I’d personally much rather save for something really amazing.

  • http://www.thecentsiblelife.com Kelly

    That’s exactly the point, David! Sometimes we talk ourselves into things when we are in that moment, but I’d personally much rather save for something really amazing.

  • http://www.thecentsiblelife.com Kelly

    Thanks for the link, Allison. I am a sucker for expensive grocery store items like cheese, olives, spreads, etc. I love the way you frame your spending.

  • http://www.thecentsiblelife.com Kelly

    Thanks for the link, Allison. I am a sucker for expensive grocery store items like cheese, olives, spreads, etc. I love the way you frame your spending.

  • http://www.learnvest.com Allison

    Thanks! I’m glad you found it useful. Haha, I would spend loads of money on cheese if I could!

    Here, actually, is an article on reducing grocery store spending, specifically: link

    Hope that’s useful, too! :-)

  • http://www.learnvest.com Allison

    Thanks! I’m glad you found it useful. Haha, I would spend loads of money on cheese if I could!

    Here, actually, is an article on reducing grocery store spending, specifically: link

    Hope that’s useful, too! :-)

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