In a world that is becoming increasing materialistic and places a huge emphasis on convenience, we should turn our attention to the topic of “needs vs. wants”. Our generation owns more “stuff” than ever before. A large part of what we own comes from our “wants” and not our “needs”. This has resulted in excess waste and pollution that is damaging our environment. Not only does this damage the environment, it also damages your financial wellness.
Today, I am going to focus on how the inability to differentiate needs and wants can hurt your financial situation. A need is something that you must have to survive. An example would be water. You need to drink water to survive. A want is a desire. An example would be the latest Gucci handbag.
A reason why a lot of young adults find themselves living pay cheque to pay cheque has to do with their spending habits. It all boils down to spending too much on unnecessary wants. Of course, this really only applies to the average joe. If you have the financial capabilities to buy all your wants, then go for it. For the average joe, we do not have to luxury to do so. However, time and time again, I see people buying unnecessary things. I mentioned it before, but I think the biggest offence is when people buy coffee and takeout on a daily basis. Having your morning coffee and eating lunch are needs, however, going to Starbucks and buying takeout, those are wants. Some may not know, but you are spending ~$2.50 on a cup of coffee that costs 20 cents to make. Finance Youtuber Graham Stephan even has a video on how buying coffee can make you poor. Buying coffee 5 days a week from Starbucks will cost you around $50 per month while making your own coffee will cost you about around $5 per month. This clearly shows the tremendous price of convenience and satisfying wants.
In all, to be financially stable, one should be able to differentiate their needs and wants. I am not advising that everyone to not spend on their wants. My concern is the frequency. There are times when you need to satisfy those wants, however, be aware of what your purchasing power allows for. Think twice before making a purchase and think about your future.