Spending Reality Check: Do You Need It or Just Want It?
What you'll learn
- The difference between wants and needs
- How outside forces can make wants feel like needs
- Why having a budget makes it easier to manage your spending
You've written down your list of goals. Check.
Put your goals in order of importance. Check.
Figured out how much it will cost to reach each goal and when you need the money by. Double check.
Now what?
In order to reach your goals, you need to figure out how to pay for them. But what if you don't have enough money to cover it all? Then it's time to look at how you're spending your money. You might be surprised!
Where'd it go?
Think about how much money you get each week or month. Maybe you get $25 a week for allowance and earn $10 for walking the neighbor's dog every Saturday.
Now think about how you use that money.
Spending $5 a week on Robux or $10 a week on smoothies might not seem like much, but it adds up quickly. Do you feel like you have money left over that you can save? If not, it might be time to get your spending under control.
How do you do that? By understanding the difference between something you need and something you want.
Guessing game: need or want?
Make a list of everything you pay for yourself. Include it even if it's just a $1 soda from the school vending machine. Remember, little expenses add up!
Now split the list into things you absolutely need and things you just want.
| My Needs | My Wants |
|---|---|
| Daily school lunches $ | Eat out with friends $ |
| Club dues $ | Concert tickets $$ |
| Phone bill (unlimited data) $$ | Friend's birthday fundraiser $ |
| Streaming subscriptions $$ | |
| Starbucks $ |
Take a hard look at your list. Is there anything you included as a need that's really a want? In the list above, for example, is Starbucks ever a need? What about streaming subscriptions?
Wants that feel like needs
Sometimes you can want something so bad it feels like a need. What's up with that?
You may be experiencing the pull of something called consumerism. It's the feeling that buying the newest, latest, greatest gadget or face mask or clothes is key to a happier life.
Do any of these examples sound familiar?
Scenario 1: Maybe someone you follow on TikTok has a cool vibe. They might not be saying, "Go buy this!" But you still want to start shopping for the clothes they wear. And they're not cheap.
Scenario 2: Have you ever dropped your phone and cracked the screen? Who hasn't? But when you get to the store to have your screen fixed, the newest version of the phone calls to you: "I have a better camera and come in a limited-edition color!"
Are you tempted to upgrade your phone instead of getting your current one fixed? Even though your current phone works just fine? That's the power of consumerism.
Fighting the urge to splurge
Consumerism isn't just the temptation to buy newer, cooler stuff. It's the thing that could be getting in the way of reaching your goals.
If you're spending all your allowance on video games or makeup, it's going to be hard to afford the new Bluetooth headphones you want.
Remember the 50/30/20 rule? That's the budgeting guideline that puts 50% of your income to needs, 30% to wants, and 20% to savings.
If you're overspending on wants, especially on impulse purchases from social media, think about ways you can fight that temptation.
If you're overspending on wants, especially on impulse purchases from social media, think about ways you can fight that temptation. Maybe you can mute the accounts that tempt you to spend the most. Or even block the apps during the times of day you're most likely to shop, like late at night or on the weekends.
It might also help to think of it this way: When you overspend on wants, you're basically stealing from your goals. Not cool.
You're the boss
By paying attention to what you buy every month, you can see quickly if your late-night shopping habit is hurting your headphones fund.
And once you get a handle on your spending, you'll see how even tiny changes can have big results. Cutting out just one $5 coffee a week would save you $260 a year ($5 x 52 weeks) that you could put toward your goals.
So, check in on your overall spending often to make sure your money is going to your needs, wants, and savings in correct proportions.
If it is, congratulations, you are making progress toward your most important goals. Keep it up!
Quiz
1. How does consumerism get in the way of your goals?
A. It makes a thing you want feel like something you need
B. It convinces you to spend more to be happier
C. It makes spending now feel more important than saving for the future
D. All of the above
Answer: D | Consumerism is almost impossible to avoid unless you live in the middle of a forest with no internet! But knowing it exists can help you to avoid the temptation to buy, buy, buy, when you really should save, save, save. Buying something new is exciting for a little while but achieving your goals feels even better!
2. Your needs cost more than 50% of your budget. What should you do?
A. Reduce the amount you're saving, just for now
B. Stop spending on wants entirely
C. Examine your spending for needs that are really wants
D. All of the above
Answer: C | Sometimes needs really are needs. And what's a need for you may not be a need for someone else. But there may be wants that disguise themselves as needs. To discover their trickery, think about each of your needs and ask yourself: Could I live without this? If the answer is yes—gotcha! It might really be a want.
3. True or false: Overspending on wants is like stealing from your goals.
Answer: True | Remember, you're in control of your spending. As difficult as it can be to say no to the things you want, you may regret it more if you say yes. Keep your eyes on the prize—your goals!—and take whatever steps you need to help reduce the temptation to spend. Once the initial urge to buy passes, you might be surprised that you never even think about that item again!
Your next steps
- Write down all the things you consider to be necessary spending every month. Does it come to more than 50% of your monthly income?
- Examine that list: Could any of the items actually be considered wants?
- Learn more about how your paycheck is affected by taxes and deductions by reading the next article in this series.