On this Article, we shall discuss issues to consider when one spends money on Materials, goods and services. That is, things that should influence us when shopping or spending money.
We must be able to differentiate between our needs and our desires (Wants).
MEANING OF NEEDS AND WANTS
Needs refer to the essential goods and services an individual requires to be alive and live normally. They are things one cannot do without. Examples of man’s needs are food, water, cloths and shelter.
Wants are desires and things of pleasure which a person seeks to enjoy. Wants are not as compelling as needs, because they can be avoided without causing harm to life. Examples of Wants are to build a mansion, buy cars, new and expensive shirt, shoes, wrist watch etc.
MAKING DECISIONS ABOUT NEEDS AND WANTS
In spending money, it is important to take care of needs before spending on wants.
Needs like Food, Shelter, Clothing, Medicals should be considered first before spending on items like Cars, Trips, Expensive suits/cloths, Jewelries, Wristwatches etc.
It is therefore important for the consumer to consider his purse, then identify his needs in terms of their importance. Then, the consumer allocates his money accordingly beginning with the most important to the least important. This requires a measure of budgeting and planning.
This is an example on how it supposed to be:
Luxury items like jewelries, drinks, holiday expenses etc.
People often spend money without plan or without giving thought to why the money should be spent on the item. Impulse buying is the purchase one makes without earlier preparation or a plan. It is unplanned and unbudgeted, hence can be harmful to one’s financial resources.
i. Avoid competition with others, always have consideration for other important needs.
ii. Itemize your needs, choose and decide on what to spend on each item, while watching your purse.
iii. Don’t be too Ostentatious!!!