I have been trying to inculcate in my adult children the virtue of frugality and prudence in their lives. I always told them to think long term. A little money saved every now and then will go some way to prepare for their future. When invested well, they can generate passive incomes to fund their expenses.

One of the tricky issues I faced was how to teach them to differentiate between NEEDS and WANTS. Even for myself I sometimes grapple with this issue. Whether something I wanted to buy was a NEED or a WANT. It can be clear cut for some things at some point in time while it can get grey or debatable for other things or at other point in time.

Let me share some examples. Handphones. When handphones first appeared on the scene, I categorised them as a luxury to me. I see them as WANTS. I have lived my whole adult life without them up to that point and was ok. So handphones were an item of WANT not NEED. But now, handphones have become a NEED. Especially if you are working, and your boss/colleagues expected you to be contactable at all times.
But a high end handphone is a WANT, especially when a $0 handphone can serve your needs. I have progressed from a dumb phone to a smart phone and found that a smart phone is a NEED. Smart phones are a NEED because I trade online, and I can do internet searches on the go.

Cars – My children asked why we have 2 cars in the family. Are they NEEDs or WANTs? I admitted that the second car which my wife drives was a WANT item. I explained to them that our first car, an MPV, was a NEED, because we needed that to ferry our aged parents and the whole family around. I told them we bought the second car because we could afford to pay for it outright using our passive income earned for the year.

Eating – Eating is a NEED to sustain life. But what to eat and Where to eat can be a WANT or a NEED. Is eating a $3 chicken rice meal versus a $10 aglio olio spaghetti the same? One is a NEED while the other is a WANT!

The list goes on and on.

Last week I saw my older son happily fiddling with a new Samsumg S7 edge phone and I asked him whether he considered that a WANT or a NEED. He said it was a WANT but that he paid for it using the interest he earned from his Bond investment. He was happy.

What I can say? There was an intangible aspect to consider. Happiness and satisfaction of owning something.