Understanding Needs vs. Wants

What's the difference between needs and wants?

Needs are essential expenses that you must pay to maintain your basic living standards. For a teenager, this might include school supplies, basic clothing, transportation to school, and personal hygiene items. Wants, on the other hand, are non-essential expenses that improve your quality of life but aren't absolutely necessary. These could include the latest smartphone model, brand-name clothing, or eating out with friends.

Why is it important to distinguish between needs and wants?

Understanding this difference helps you prioritize your spending, make informed decisions about where to cut back if necessary, and align your spending with your values and goals. By being mindful of this distinction, you can make more conscious choices about where your money goes.

Is it ever okay to spend money on wants?

Yes, it's okay to spend money on wants sometimes. The key is to ensure you're meeting your needs and financial goals first. Balance is important in managing your finances effectively.