In a nutshell, needs are things that are essential for survival or basic well-being, like food, water and shelter. Wants are things that improve comfort or happiness but are not essential, like luxury items, entertainment and latest trends.

It’s surprising how quickly a want can transform into a need. For instance, seeing an advertisement for the latest smartwatch might initially spark the thought, “That’s awesome, but my current one works perfectly.” Yet, within a few days, that new smartwatch could end up on your wrist, leaving you wondering how it happened.

What to do about needs and wants

• Pause and reflect: When you feel the urge to buy something, ask yourself, “Do I really need this?” This helps distinguish between a fleeting desire and a genuine need.
• Evaluate your values: Consider what truly matters. Sometimes, happiness comes from appreciating what you already have. Reflect on whether the item aligns with your long-term goals and values.
• Delay gratification: Give yourself time before making a purchase. If the need persists after a few days, it might be worth considering. Often, the initial impulse fades, revealing it wasn’t necessary.
• Prioritise needs over wants: Focus on fulfilling essential needs first, like food, shelter, and healthcare. Once these are secured, you can think about indulging in wants, but with a clear understanding of their place in your life.

Understanding the difference between wants and needs is key to managing personal finances and achieving a balanced life. By reflecting and prioritising, you can make informed decisions that align with your values and financial goals.

A practical tip for mindful spending

Here’s a simple rule that can help you stay intentional with your purchases: when something new comes into your home, something else should go. It’s a great way to avoid clutter, both physically and financially, and encourages you to think about what truly adds value to your life.

And if you’re thinking of buying something, wait three days. If the desire is still there after that pause, go ahead. But often, the impulse fades, and you’ll realise it wasn’t a need, just a moment of temptation.

When you do decide to let something go, consider donating it to a local charity or community group. It’s a simple way to give back and make sure your unused items find a new purpose.

This information is of a general nature and is not intended as personalised financial advice. RIVAL Wealth is a Financial Advice Provider (FAP) licenced by the Financial Markets Authority to provide financial advice. Our disclosure document is located at rivalwealth.co.nz or a written copy is available on request