financial planning distinguish es between needs and
Answers
Wants are desires for goods and services we would like to have but do not need. Many wants may seem like needs. Needs are a special kind of want, and refer to things we must have to survive, such as food, water, and shelter.
Needs:
A need is something which is essential for you irrespective of the financial situation/conditions. These are the things you have to take care first and only then comes other things which you can do without.
Needs Example
House Expenses
Child Education
Saving money for Retirement
Medical Expenses
School/College fees and expenses
Family Vacations and outings (in limit)
Wants:
These are things which you wish to have but they are not above your Needs. For example a Car is a Want when compared to your Child Fees or Education saving. You can live your life without car but Child Education is Vital and cannot be compromised.
Some people’s Wants can be a Need for others and vice versa. It all depends on personal life style and attitude. But the main point here is that you have to differentiate between your Needs and Wants at short to medium term time frame and Long term view.
Wants Example
Extra Vacation
Expensive clothes above your normal requirement
Expensive Car or any vehicle above your budget