Wants versus Needs

All around, we are told what we need: stylish clothing, the newest cell phone, the slickest car, the most convenient, tastiest hamburger. This day and age, we are inundated by messages telling us what we need to buy in order to be successful and happy human beings.

But the question is: Do you really need the newest, shiniest, coolest, fastest thing? If so, at what cost?

One principle of money management is to think about your purchases in terms of wants versus needs. Before you buy something, stop for a second and ask: Do I really need this? Or will a less shiny, less cool, less expensive version do the trick? Maybe can I do without this product entirely?

When you create a spending plan for the semester, start by identifying all the things you actually need: food, housing, transportation, health care, rainy day savings. With the remainder, look at some of the things you want.

Before buying, always stop to think: Is this something I really need or just want? How - if at all - will it contribute to my success and happiness?