How to Determine Needs vs. Wants

One of the biggest things you should do as an adult is to learn to distinguish between your needs and your wants. A mark of childhood is the inability to do just this. Most children don’t understand that there is even a difference between what they need and what they want, which is why grocery-store-fits over candy bars are so common in the under-five crowd.

Learning to determine needs vs. wants is a mark of maturity, but it’s unfortunately one mark of maturity that many adults haven’t learned to grasp yet. This is evidenced by the fact that so many people are living well beyond their means, racking up credit card debt to unbelievable levels in order to keep up with the Joneses.

If you’re struggling to rein in your spending – or if you just want to live a more fulfilled life – one of the first things to do is to learn to separate what you really need from what you just want. Here are a few ways that you can do that:

Understand What Makes People Happy

Lately, lots of psychologists and sociologists have been studying what it is that really makes people happy. Sometimes, there really is a link between money and happiness, but that link, it seems, only goes so far.

According to a study published in the Proceedings of the National Academy of Sciences, money can actually “buy” happiness on some level. This study found that people were increasingly happy as they made more money, but the happiness leveled out after they hit an annual income of $75,000.

Why is this? Researchers think it’s mainly because at an income of around $75,000, people can take care of their basic needs and fulfill many of their wants. Beyond this, though, the income just buys extra stuff that isn’t really necessary to basic existence or happiness. So, it’s a good idea to get your finances under control so that you don’t have to constantly stress about things like bills, mortgage payments, and retirement, but you don’t need to constantly be striving to make a six figure income, either.

Another study published at the meeting for the Society of Personality and Social Psychology showed that experiences, rather than things, are what make people really happy. In this study, people who spent money on new items they didn’t really need were apt to have buyers’ regret within a few weeks or months. Those who spent money on new experiences like a vacation, though, were more likely to look back on their purchases with satisfaction and to experience more happiness!

Truly Think About Your Purchases

Understanding what makes people in general happy can help you understand a little more about yourself. When you can pay for your basic needs, you’re more likely to be happy because you’ll have less stress in your life. However, it might take some time to learn to separate what you need from what you only want, and then it might take even more time to learn to prioritize your “wants” so that you can spend first on things you want most.

The first step to determining your needs is to write down the things you think you truly need, and then to mull over that list. What would happen if one of those things was missing from your life? Would you actually die or at least experience a lot of hardship? This list will actually look different for different people.

For instance, for some people, having a personal car truly is a need. In the Midwest, for instance, most cities are so spread out that you can’t walk or bike to work, and without a car, you might not be able to hold down a job. In other areas, though, where walking and biking are easier to do, you can more easily live without a car – even though it might be a little inconvenient.

Once you’ve got your list of needs down, it’s time to figure out what you want most so you can spend your discretionary funds wisely, and only after, of course, you’ve taken care of paying for what you need.

Think about some things you’ve been wanting to purchase in the near future. Think about how much use you would get out of these things and how they would add to your life. If you find that they would add a great deal to your life and that you would use them often, put them at the top of the list. You might be surprised at the things you end up crossing off of your “wants” list altogether when you really think about them and find that they would probably end up in a garage sale in two years!

One final technique for determining whether or not you really want something is to delay your purchase of it. Next time you’re in a store and see something you want, tell yourself you’ll go back and buy it in a week. If you still really want it in a week, go for it. Most things you want, though, will fall out of mind within a few days, and you won’t end up spending money on them!

Determining needs vs. wants is an essential skill for adulthood that you should start working on today. Whenever you have doubts about whether you need or merely want something, just think about what your life would be like without it. If you could survive – even with a bit of inconvenience – then the item is just a “want,” and you might be happier in the long run if you don’t spend money on it.

The author of the article, Daniela, blogs at Credit Donkey.