Financial Planning Tip #7: Know Your Needs Versus Wants
When it comes to Financial Planning, have you asked yourself what is more important – Your Needs or Your Wants?
Not too sure what is the difference between the two?
– Your Needs In General
In a general sense, your Needs can be anything from Goods to Services that are necessary for living, e.g. Food, Clothing and Shelter
– Your Needs In Financial Planning
In a Financial Planning sense, your Needs can be setting up an Emergency Fund to providing an Income Replacement in the event of Death, Permanent Disability, Critical Illnesses and even have enough coverage for Hospital & Outpatient Expenses.
– Your Wants In General
In a general sense, your Wants can be anything from Goods to Services that may not be necessary for living, e.g. Toys, Cars, Games and Entertainment.
– Your Wants In Financial Planning
This can be saving enough for a Expensive Car, for a Private Property when you already have a Shelter, and even for a Luxurious Retirement.
Even though the meaning behind a Need and a Want can be quite straightforward like what’s mentioned above, but do you know that when it comes to differentiating and prioritizing one’s needs and wants, many people are still having difficulties?
The Example Of How People View Their Needs And Wants
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