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Do you know the difference between wants and needs when making purchase decisions?

Well, there are different types of expenses, wants and needs, that impact your short- and long-term finances.

And the decisions you make about purchases and expenses impact your budget. 

What is a want?
A want is something that is not essential to survival, but that you would like to have. These could include the following:
•    Designer clothing
•    Cable or Satellite television
•    Video games
•    DVDs
•    Cell phone

What is a need?
A need is something that you must have for survival.

These could include:
•    Food
•    Electricity
•    Water
•    Clothes
•    Shelter

Needs also may include items that will help you accomplish your financial goals.  

So, let me ask you, Is a computer a need or a want? 
A computer doesn’t fit the traditional definition of a need but consider this example. You are a student attending college and of course, the main goal in college is to get a better education. With more education, your chances increase for a better job to make more money.  In this scenario, a computer could be considered a need as it will help you accomplish a financial goal.

Thank you for watching today, hopefully, you have a better understanding of wants vs needs. To continue your financial education, look for additional Real-Life Finance videos from Old National.

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Ben is responsible for enhancing Old National financial literacy initiatives by partnering with schools, colleges, universities, businesses, nonprofits and government agencies. In 2017, Ben was recognized by the National Financial Educators Council (NFEC) with its coveted Financial Education Instructor of the Year Award.

This content is not intended to provide legal, tax, accounting, financial or investment advice or indicate the suitability of any product or service for your unique circumstances. You are encouraged to consult with a qualified legal, tax, accounting, financial or investment professional based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.