Recently the media was awash with news of an individual who won a whopping N35 million Sport Utility Vehicle on a Mobile Operator-sponsored competition. The gentleman was naturally ecstatic and excited relaying his story of good fortune. But is this really good fortune? Can this individual of modest means even afford to buy new tires, or even replace broken mirrors or headlights in a car worth so much? Shouldn’t he sell it immediately for a fraction of the price and move on? I instantly felt sorry for him because, like many people today he failed to clearly distinguish between his needs and wants. It was so clear that he didn’t need such an expensive automobile.
This situation between needs and wants is intrinsic to the nature of man and has existed for as long as man has been on earth. Once our ancestors realised that they did not have all the required resources to live a successful life, they had no choice but to consider their needs and against their wants before deploying their scarce resources. This consideration has continued even till this very day; and is extremely important as you try to make use of your scarce financial resources.
Simply put, needs are the basic things that are required for your safety and health, including food to keep you alive, clothing to keep you warm, and a shelter to protect you. Wants, on the other hand, are items you desire but are not critical to life. Needs are basics, things that you cannot afford to live without, while wants can be done without because they stem from your desires.
This comparison is expected to come in handy anytime you want to make a purchase. Basic economics teaches us that due to limited resources we cannot buy everything we would like. We need to prioritise our purchases. So starting today ask yourself questions before making your next expensive purchase – Do I need this? Or do I want this? Can I live without it? You are permitted not to consider your needs and wants when you have unlimited resources with only a few belonging to this privileged class.
In order to begin to grow wealth you must be willing and prepared to make sacrifices by putting your money into ventures that will yield more for you. This won’t be possible if instead you put your money into taking care of your desires, your wants. You would be well advised to take care of all your needs first, postpone your desires until later and invest the remaining funds.
I have discovered that one’s wants are always far more expensive than one’s needs. This is due to the fact that wants are dependent on desires. Nobody ever desires anything simple or basic; rather we desire the best, most expensive, biggest, loudest or grandest of anything. At the core of these desires is the urge to be feared, loved, respected, accepted and appreciated. Too many people buy things they don’t need with money they don’t have to impress people they don’t know.
Every society consists of lots of people who never assess their needs against their wants. These are the people that want to wear the latest fashions, drive the best cars, live in the best homes and travel to many exotic locations for instance, without working for it. They will do anything to achieve their desires, even committing unethical acts. They even want to outdo the rich in their affluence and displays of wealth. People with this kind of attitude will never make it because they have ignored the foundation to wealth which entails making the most use of scarce resources profitably.
In order to make the most of your money in 2015 one must make a budget, attempting to effectively plan your inflows against your outflows. Considering your wants vis a vis your needs aids in your budgeting especially since you are on the road to wealth, and not yet there. Budgets help you to locate monies that can be used for investment purposes from your inflows, as you decide to cut expenditure on certain items from time to time. This can only be achieved when you can effectively determine if the item is a need or a want.
Our friend in the above paragraph definitely has a need for good transportation, but does an extremely expensive automobile constitute good transportation? No. He would definitely be better off selling the automobile and ploughing the gains into multiple investments than driving it around. This is the time to meet needs quickly and delay wants because you are in the building wealth mode of your life. Ensure you quickly invest your money after meeting your needs so that you will not be tempted to take care of your wants. One day you will be able to have what you want, but that day is not now.
Kenneth Doghudje
