Like many, we often find ourselves in a struggle negotiating between our wants and needs. This is something I had to come to terms with, and it has shaped my perspective on money, spending, and investment. The purpose of this blog post is to talk about a personal experience that changed how understood the difference between needs and wants, and how this understanding has aided me in smarter financial decisions.
The Start: Buying My First Laptop
I purchased my current laptop for 3 lakh rupees in 2021. At that point, this laptop was not merely a wish; it was essential.
I was still in the process of starting my business, so it made sense to have a reliable tool for work.
This purchase signified the start of my journey. Having a good laptop was imperative for all the tasks I intended to undertake—freelancing, running my startup, and networking with clients.
Regardless, my following purchase turned out to be more complicated. I invested in an iPhone and an iPad shortly after for about 1 million rupees.
These gadgets served a purpose for my line of work as well—allowing for constant communication, task management, and overall productivity.
But was it a need or a want? The answer is not straightforward, yet in my case, I viewed them as investments to be more effective and sophisticated in my work.
The Bike Dilemma: From Want to Need
And then there was the bike. 🏍️ For the longest time, I delayed acquiring one. There was already a family bike, and I could always access it whenever the need arose. To me, a bike was a desire, not an essential item. Spending money on something I could rent at no cost was simply not sensible.
That changed in 2023, when I opened my company’s first ever physical branch. I suddenly had to show up to the office every single day.
The trip was not pleasant, and I quickly understood that a bike was no longer a luxury; it had turned into a prerequisite. I purchased one and, rather effortlessly, my life improved by a significant margin in terms of time and convenience.
This perfectly illustrates how something which seemed to serve no purpose could transform into a necessity, owing to a change in circumstances.
The Moral of the Story: Prioritizing Needs Over Wants
One key lesson I acquired from these experiences are the need to understanding the differentiation between needs and wants while dealing with money.
Needs are those things essential to live, work, and function in an efficient manner. Wants are the things one wishes for but can do without, at least for a little while.
The fact that for long lasting contentment prioritizing needs over wants undermines the essence of the meticulous planning required to achieve financial security which should be the planning’s resulting output.
While balance is integral, the marking variable in the pursuit of lasting joy attributed to simpler living without accumulating burden is the reduced responsibilities. Once needs are thoroughly understood, it becomes easier to smarter and practical financial decisions.
The Importance of Smart Spending
Determining needs and wants often influences how we purchase items, but goes well beyond that into financial decision-making, saving, and investing too. Based on how this understanding has impacted me personally, here is my approach:
1. Focusing on Long-Term Goals
Short-term gratification can be tempting. However, taking care of my financial obligations first and postponing my wants has allowed me to work towards achieving long-term financial stability. Additionally, making the right business investments at the appropriate time stifles overindulgence (e.g., purchasing a laptop and, when relevant, a bike).
2. Avoiding Impulse Purchases
Understanding the difference between needs and wants is critical because this clarity fosters the ability to curb impulse spending. Personally, I no longer make purchases on a whim. Rather, I evaluate whether an item aligns with my objectives before spending money on it.
3. Building a Strong Financial Foundation
This particular approach has allowed me to build a solid financial foundation which simultaneously fosters the ability to strategically reinvest in my business, sustain debt-free financial stability, and take calculated risks. Focus on your needs and only spend on your wants when absolutely necessary.
A Smart Financial Strategy: Start with What You Need
Starting off on the right foot with money management requires taking specific approaches; primarily determining what is necessary. To begin, consider the following:
- Determine Requirements: What resources are paramount to your professional, personal, and mental wellbeing? Work on these areas first.
- Define Financial Objectives: What’s the long term aspiration? Is it buying a house, saving up for an emergency fund, or putting resources in the business? Clarify these goals.
- Allocate Budget for Flexibility: Setting aside funds for necessities is crucial, but it’s equally important to allow for discretionary spending that will improve your quality of life—these purchases just can’t facilitate financial strain.
- Make Meaningful Purchases: Expenses such as training and tools of the trade that help fast track career progression should be prioritized. For instance, I made more work-related investments. It required understanding which purchases were crucial and which could be deferred.
The Road Ahead: A Simpler, More Focused Approach to Spending
Personally speaking, I had planned everything in my life and feel attending to my needs has provided a massive difference in life overall. For me at least, it’s not merely getting rid of passions; I still have some reasonable options that enable me to achieve my goals.
Adopting a spending plan that eases financial burden and directly focusing on important aspects of life has greatly enhanced my overall mindset as well as my life’s finances.
While still expanding my services, I am aware of the factors distinguishing needs and wants and how they will benefit me by permitting me to direct my focus.
This approach has aided in forming policies that are easy to pursue, fulfilling my lifestyle, and fulfilling my long term aspirations.
