Chapter 1 Planning Your Financial Future: It Begins Here
11
Needs and Wants
Before you can set fi nancial goals, you must determine your needs and
wants. Needs are those things a person must have to survive, such as food,
water, shelter, and clothing. One of your fi nancial goals may be to have enough
money to pay for your basic needs. In addition to needs, most people have lots
of wants. Wants are things a person desires but are not necessary for survival.
Examples of wants include cell phones, cars, designer clothes, etc. (Although
some people may argue that cell phones are needs, you can see the difference!)
A fi nancial goal that many people have is to purchase a car.
In many cases, wants are related to values. Values are your beliefs about
ideas and principles that are important to you. For example, a value for you
might be honesty. A value for someone else might be trustworthiness. Have
you thought about your values? Values are different for everyone. Your
experiences and the ideas and beliefs of your family and friends may affect
your values. Your values will affect how you think about money. If you value
helping others, for example, you may be likely to give money to charities or to
friends who are in need.
By considering your values and then prioritizing your needs and wants,
you can direct your fi nancial future. If you are like most people, you will
desire things that are not needs. If you spend too much money on things
you want, you might not have enough money to pay for things you need.
By understanding the difference between needs and wants, you can make
informed, reasonable choices based on the money you have available.
Check
Your
Understanding
Why is it important to know the difference between needs and wants? How do
values play a role in determining needs and wants?
Many people
around the world
struggle to obtain
basic daily needs
that others take for
granted.