Financial Literacy | Needs and Wants | Rich Mindset | Manage Your Money | Entrepreneurship

Summary

This video explores the difference between needs and wants, emphasizing the importance of budgeting for essential expenses while managing desires. It highlights how our spending often exceeds basic survival needs, like opting for a house instead of a tent or buying designer clothes. The key to managing finances is determining what is necessary to maintain our life commitments and finding affordable alternatives. The script compares budgeting to a cookie jar, where prioritizing needs first ensures there's still room for wants, helping maintain balance in personal finances.

Takeaways

• 😀 A budget may not work if our expense estimates are different from actual spending or if there's a problem with how we manage our spending.
• 😀 A budget helps us understand what we can't afford, but it doesn't prevent us from making purchases.
• 😀 Basic needs include food, clean water, clothing, shelter, and transportation to work or school.
• 😀 Wants are expenses beyond basic needs, like choosing an apartment over a tent or buying new clothes instead of used ones.
• 😀 We often spend more on wants than necessary to meet our needs.
• 😀 To distinguish between a need and a want, ask yourself if you can function in life and meet your commitments without it.
• 😀 If there's a more affordable option that still fulfills the same purpose, it's worth considering.
• 😀 Just because we can live without something doesn't mean we have to avoid it if it brings value.
• 😀 A budget is like a cookie jar: if we prioritize wants first, we may run out of money for needs.
• 😀 Since wants usually exceed our resources, we must budget and save for important expenses first.
• 😀 Prioritizing needs ensures we have enough room in the budget to satisfy many of our wants.

Q & A

What are the two main reasons a budget may not work?

A budget may not work if our estimates of expenses were different from what actually happened, or if there is a problem with our spending habits.

What is the role of a budget?

A budget tells us what we cannot afford, but it does not prevent us from spending money on things we can't afford.

What are some basic needs that people share?

Basic needs include food, clean water, clothing, shelter, and a way to get to work or school.

What are 'wants' in the context of budgeting?

Wants are things we spend money on that go beyond our basic needs, such as living in a house instead of a tent or buying new clothes instead of used ones.

How can we distinguish between needs and wants?

To distinguish between needs and wants, ask yourself if you can still function in life and meet your commitments without it, and if there is a more affordable option available.

Is it always necessary to live without something we want?

Just because we can live without something doesn’t mean we necessarily have to. A budget helps prioritize what’s most important.

How is a budget like a cookie jar?

A budget is like a cookie jar because if we prioritize our wants first, we may run out of money to meet our needs. The key is to prioritize needs first and budget for wants later.

What is the challenge with balancing needs and wants?

The challenge is that our wants almost always exceed our resources, so we need to budget and save for the most important expenses to ensure we can afford both needs and some wants.

How should we approach our spending priorities?

We should prioritize our needs first in the budget to ensure that we have enough to cover essentials, while still leaving room for satisfying many of our wants.

What is the ultimate goal of budgeting?

The ultimate goal of budgeting is to ensure that we can meet our most important expenses, while also managing to satisfy many of our wants without overspending.