Young people's dilemma these days often revolves around fulfilling "needs" or "wants." Your heart tells you that you really want to buy new clothes, but reality hits because there are bills to pay.

Especially if you're part of the sandwich generation, where you need to support not just yourself, but also your family. If you can’t prioritize between needs and wants, your finances can quickly spiral out of control.

Of course, you don’t want your finances to get messy and end up short on money, right? So, to avoid that, you first need to understand the difference between needs and wants. Let’s break it down together in this discussion!

Definition of Needs and Wants

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To make it easier to understand, let’s take a look at an example of the needs and wants faced by Bunga:

Bunga gets paid on the 28th of every month and is trying to manage her salary as part of the sandwich generation. But on that same date, there’s a huge payday sale, especially for an item Bunga has had her eye on for a long time. On the other hand, her credit card bill is also due on the 28th.

In this illustration, if Bunga chooses to check out the item she wants, she won’t have enough money to pay her credit card bill. But if she holds off on her desire, she can pay the bill immediately without worrying about late fees or penalties. Plus, she could even set aside some money for emergencies or savings.

So, simply put, needs are urgent things that must be met. If your needs aren't fulfilled, you might become unproductive.

In this case, needs can include food, drinks, essential clothing, electricity, water, and even tertiary needs like WiFi, smartphones, and so on.

Meanwhile, wants are temporary items or services, and not fulfilling them won’t affect your survival. Examples include accessories, trips to the mall, fancy meals at a café, and similar things.

The Difference Between Needs and Wants

Is the difference between needs and wants still unclear? Take a look at the table below for a more concise explanation:

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Wise Tips to Differentiate Between Needs and Wants

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Now that you understand the definitions and differences between needs and wants, it’s time to apply this knowledge to your daily and monthly financial management. Let’s check out these tips:

1. List all your wants and needs

The first tip to know the difference between needs and wants is to list (or log) everything you want to buy or use. It’s okay if the list is long, because we will sort it based on priority.
Why make a list? By listing, you indirectly start thinking about whether you really want to buy or use the item. You can also sort out which items or needs are more important to fulfill.

2. Ask yourself with certainty

Once the list of wants and needs is complete, now it’s time to ask yourself about the items on that list. Ask questions like:

• Do I really need item Y?
• Is there an alternative to item Y?
• If I buy item Y now, will my finances be safe for the next month?
• Is there another way to get item Y at a lower price? And so on.

3. Create a priority scale

Lastly, creating a priority scale is a wise tip for distinguishing between needs and wants. A priority scale “forces” you to place the most urgent things at the top and those that can be skipped at the bottom.

This way, you won’t easily spend money just to fulfill temporary desires because you were tempted by huge discounts or found something cute.

Now, maybe you're wondering how to manage monthly expenses effectively. Modern technology makes it super easy for us to manage finances online. Especially for Honest Credit Card users, you can use the Honest app to track your spending in real time, so you don’t go overboard with your shopping!

How does it work? Every month, you’ll get information about how much you've spent using your Honest credit card. Real-time notifications are a huge plus, allowing you to track which needs have been met and which haven’t.

So, it’s clear now, right? What is the difference between needs and wants? Don’t let your expenses exceed your income!