How to Distinguish Between Needs and Wants to Control Spending

Financial planner Rista Zloydika, CFP, WMI, has shared methods for distinguishing between needs and wants to control expenditure and maintain financial stability.

Speaking from Finante.id, a financial education and consultancy service provider, Rista stated that a simple way to differentiate between needs and wants is to ask oneself a specific question before deciding to purchase an item: “Can I still carry out my daily activities effectively if I do not buy this item right now?”

If the absence of an item prevents an individual from performing their daily tasks properly, the item can be classified as a need. However, if the item is only required for added comfort, to follow trends, or if delaying the purchase does not disrupt primary activities, it falls into the category of a want.

“For example, wait 24 to 72 hours before purchasing unplanned items,” she suggested.

She noted that implementing a waiting period allows individuals to re-evaluate whether the intended purchase is truly necessary. This habit of delaying purchasing decisions can prevent impulsive spending driven by the temptation of promotions, discounts, or the desire to follow trends.

Rista emphasised the importance of being able to distinguish between needs and wants to set spending priorities and manage finances, particularly during periods of economic downturn. The ability to control daily expenditure and ensure every purchase aligns with priorities is essential to minimising the risk of financial difficulties.