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Here's How to Distinguish Needs and Wants in Financial Planning

Distinguishing between needs and wants is the first step in financial planning called prioritization. We can summarize the priority scale as a list that has been compiled based on the level of one's needs.

Usually, this level of need starts from the most urgent to the less urgent. The priority scale can influence a person to be able to know what needs should be prioritized, rather than desires.

Financial Planning

In financial planning and meeting needs, a priority scale is needed. This affects the usefulness of these finances so that they can be used according to more important needs.

How to do it? Here are the most striking differences between needs and wants.

Needs

Needs are basic and important things for survival. If needs are not met, then we cannot live life as usual. Example:

  • Home
  • Food & Drink
  • Clothing
  • School fees
  • Etc.

Wishes

Desires are habits related to our lifestyle or selfishness. We usually indulge in them based on lust and momentary interest. Example:

  • Games
  • New clothes from a preferred brand / branded
  • Latest Gadgets
  • Watching a movie
  • Road trip/traveling
  • Etc.

In conclusion, a priority scale is a list that contains financial planning to distinguish the fulfillment of needs from wants.

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