I am no financial guru, but I strongly believe that Financial struggles can manifest in two main ways. Firstly, there are people facing an income problem – their earnings from work fall short, barely covering the essential costs of living. On the flip side, is another group grappling with financial difficulties because they lack an understanding of distinguishing between needs and wants.
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For clarity sake, let's delve into the distinction.
You see, Needs encompass fundamental requirements like affordable housing in safe neighborhoods. Contrastingly, wants are characterized by desires for luxury, such as a high-end apartment in the trendiest area or an oversized house on the block. Similarly, safe and reliable transportation for daily commutes is a need, while an extravagant luxury car loaded with features falls into the want category.
Basic and comfortable clothing falls under the need category, while a wardrobe filled with designer labels and luxury fashion belongs to the realm of wants. Fulfilling the need for sustenance involves buying food to cook at home, while dining out, especially at upscale establishments, constitutes a want.
Essential communication can be met with a basic, affordable cell phone, ticking the need box. However, frequently upgrading to the latest phone model, even when the existing one functions perfectly, becomes a want. Practical and affordable furniture is a need for a functional living space, whereas designer home decor falls into the want realm, adding a touch of luxury.
While these differences might be clear to some, it's essential to understand that what's obvious to one person may not be clear to everyone. In almost ten years of talking about money, a key lesson is that many people overlook the importance of distinguishing between needs and wants. This confusion can result in individuals who earn well having nothing left for savings or investments.
I hope this is helpful to someone.