Understand the difference between needs and wants

Key questions to ask yourself:

Am I disciplined when it comes to spending?
Do I spend money that I do not have?
Do I lack money management skills?
Do I want to change the way I do things?
Do I want to be free from money stress?
Am I ready to take up the challenge?

Needs vs Wants

Do I need this?
It is important to ask yourself questions before you make the decision to spend money, especially when it is a big spend. In order to manage a budget responsibly, you have to take care of the needs before the wants. Needs differ from person to person but can include: water, food, school and electricity.

Do I want this?
We do not only have needs; we also have wants - things that we would like to have, but we can do without. Wants can include: Luxury foods, cigarettes, alcohol, branded clothes and fancy cars. When you calculate the damage caused by a few justifications to buy things you do not need, you may realize you have spent far more than what was intended.

Does that mean that you should only buy the things that you need? Not at all. Life is meant to be lived, not survived. Treat yourself to some wants along the way, but do so “when you can afford to”.
In reality, you only need four things to survive:
• A roof over your head
• Enough food and water to maintain your health
• Basic health care and hygiene products
• Clothing (just what you need to remain comfortable and appropriately dressed)

Everything that goes beyond this – a big house, name-brand clothes, fancy foods and drinks, fancy car – are wants.

source:blog.standardbank.com