Needs vs. Wants

Focus Questions

1. What is the difference between needs and wants?2. What factors should you consider when you go

comparison shopping?3. What marketing tools and tactics do companies

use to encourage you to buy more expensive brands or simply to overspend?

4. What elements make ads effective?

• Consumers people who acquire goods and services

• Need is a necessity – a good or service that you must have to survive – like food, shelter, medical, and clothing

• Want is something you desire; it is not necessary

Spending Your MoneyNeeds Versus Wants

• Needs• Wants Bread

WaterRentElectricMedicineWork shoes

CameraHi-def TVSteak

Designer clothesDownhill skisMP3 player

• Discretionary income is money left over after savings and essential expenses have been accounted for

Spending Your MoneyDecision to Buy

• Create spending chart• Consider opportunity costs– What is the opportunity cost of buying

video game equipment?

Breaking the spend, spend, spend cycle

• Remove your emotions from your finances

• Determine your spend, share, and save percentages

• Think about your own values

• Think about what you need

• Learn to separate your needs from your desires

• Know your strengths and weaknesses

Spending Your MoneyConsumers

• Big spenders (spendthrifts)– Addicted

• Penny-pinchers

Decision to Buy

What brand to buyWhere to buyWhether to buy now, or later

© EMC Publishing, LLC

• Do you know anyone who is addicted to spending?

• Who is hurt if someone is addicted to spending?

• What advice would you give to someone who is addicted to spending?

• Comparison shopping researching various brands to buy the highest quality item at the lowest price

Your Spending Budget

• Opportunity cost the cost of giving up one thing to get something else

Assessment

1. Name two ways you might comparison shop.

2. How can peer pressure influence your spending decisions?

3. What is opportunity cost?

4. Imagine that you have a younger brother who loves to buy new video games and spends all his money on them. A new video game console is coming out next month, and he is desperately scrambling and pleading for money to buy it. What kind of advice would you offer him about making this purchase?

5. You have always wanted a Vera Wang jacket, and you see one on sale for half price - today only. Even on sale, the price is still about twice what you would normally pay for a jacket. You have enough money in your checking account and would not have to withdraw from savings. You tell yourself you will not buy any other new clothes this winter, just to have this jacket. What are the pros and cons of such a decision?