MODULE 9:
Paying bills and other
expenses
Needs, wants, and obligations
Needs, wants, and obligations are all
things you spend money on. But,
what are the differences among
needs, wants, and obligations? Needs
are something you must have to live.
Wants are things you can survive
without. Obligations are things you
must pay because you owe someone
money (a car loan) or have been
ordered to pay someone (child
support).This can be a struggle for many people. For some
people, there is never enough income to cover
their needs, wants, and obligations. For others,
balancing their personal priorities and their
cultural expectations can create a challenge.
The general guideline for financial health is to
spend less than you earn. But, if your earnings do
not cover even very basic living expenses, this rule
of thumb may not seem very helpful.
No matter what your situation, it is important to
start by understanding the differences among
needs, obligations, and wants.
Needs are those things you must have to
live. Shelter and utilities, food, clothing, and
transportation are examples of needs. The difficulty with needs, however, is that there is a wide
range of options for shelter and utilities, food, clothing, and transportation. Determining what
you can afford to get and to maintain or sustain can be a challenge with respect to needs.
Obligations are those things you must pay because you owe money or have been
ordered to pay someone money. Debts are examples of obligations. Child support, alimony,
and judgments are also examples of obligations.
Wants are the things you can survive without. For example, while a reliable car to get to
work is a need, a new car with expensive features is both a need and a want.