Financial stability is not just about how much you earn, but more about how wisely you manage your expenses. One basic principle that is often overlooked is understanding the difference between needs and wants. Both are equally important, but must be placed in the right priority so that your finances do not fall apart.

Many people experience financial difficulties not because they do not have enough money, but because they cannot distinguish between needs and wants. Without this awareness, spending will often be controlled by momentary emotions rather than logic. Now, so that you can be wiser in making financial decisions, let’s learn more!

1. What are needs and wants?

In simple terms, needs are anything that must be met in order to survive and live a decent life. Examples are food, shelter, transportation, and healthcare. Without these necessities, the quality of life can be significantly compromised.

In contrast, wants are things that are additional and not essential. For example, changing to the latest gadget when the old one still works fine, or buying new clothes just because it’s trendy. Wants often satisfy ego and emotions, rather than pressing needs.

2. Why Separate Needs and Wants?

Separating needs and wants will help you create a realistic budget. By prioritizing needs, you can ensure that your main expenses are covered before spending money on optional things.

In addition, realizing the difference between the two helps you to avoid a consumptive lifestyle. Not a few people end up in debt just because they satisfy their short-term desires too often without considering the long-term impact.

Also Read: 5 Financial Mistakes Young People Make at the Start of Their Careers – Treasury

3. The impact of ignoring the difference between needs and wants

When you fail to differentiate between needs and wants, you will be more prone to impulsive decisions. For example, spending money on expensive vacations when you don’t have enough savings, or taking out luxury installments without careful consideration.

The long-term impact can be quite serious: unhealthy finances, accumulating debt, and difficulty achieving financial goals such as emergency funds or investments. Conversely, if you are able to control your desires, you will have more room to build a more stable future.

4. How to easily recognize needs and wants

The first step is to ask yourself: “Do I really need this to live or work?” If the answer is no, it’s most likely a want. For example, dinner at a fancy restaurant can be replaced by cooking at home without sacrificing nutritional value.

Try to postpone purchases that you feel are not that important for 24 hours. If after that you still feel the need, then reconsider wisely. This method will train you to control emotional urges and be more rational in making decisions.

So that you can better understand the difference between needs and wants, see the following differences:

• Needs are Basic, Wants are More Diverse

One of the fundamental differences between needs and wants lies in their nature. Needs are basic and essential, such as food, water, shelter and healthcare. Without fulfilling these needs, survival will be compromised. Therefore, needs should be the top priority in any financial planning.

Meanwhile, wants have a much more diverse scope. Wants can be anything-from branded goods, luxury vacations, to expensive coffee every morning. Desires arise from a desire for self-gratification, not for survival. Realizing which ones are truly basic and which ones are just extras can help you make wiser decisions every time you spend money.

• Needs Are Usually Fixed, Desires Can Change

Human needs generally don’t change much over time. We will always need nutritious food, adequate shelter, transportation for mobility, and access to healthcare. When you are budgeting, needs are elements that can be predicted and budgeted for consistently.

In contrast, wants are very flexible and can change according to trends, moods, or influences from the surrounding environment. Today you might want to buy new sneakers, next week you might be tempted to go to a concert or buy jewelry. That’s why it’s important to regularly evaluate your desires so that you don’t regret it later on.

• Needs Can’t Be Postponed or Ignored

Another important thing that differentiates needs and wants is their urgency. Needs are urgent and cannot be delayed. For example, if you don’t pay for electricity this month, the lights will go out. If you don’t buy food, you will starve. Needs are directly related to the function of daily life.

In contrast to desires that can always be postponed. There are no major consequences if you don’t buy new clothes or don’t go to the movies this weekend. By understanding this urgency, you can be more disciplined in managing your budget, prioritizing needs, and fulfilling desires only if the budget allows.

After understanding the difference between needs and wants, the next step is to manage finances more strategically. One wise way to secure your financial future is to start investing. But, investment must also be adjusted to the conditions and comfort of each.

For friends who want to start in a safe and easy way, digital gold investment can be an attractive and minimal risk option. Through the Treasury application, you can start investing in digital gold starting from only Rp5,000, which is practical, flexible, and safe.

Let’s turn impulsive desires into smart investment steps. From now on, make your needs a priority and direct your excess funds to the future with Treasury!