Financial foundations: Distinguishing needs vs. wants

JPMorganChase offers a comprehensive suite of youth financial education initiatives, providing resources ranging from bite-sized budgeting modules to multi-year mentorship programs. Their primary offerings span digital tools, community-based workshops, and philanthropic career pathways.

For many young adults, the paycheck clears and the spending begins. But without a clear framework for what truly needs to come first, that money can disappear faster than expected. One of the most foundational lessons in personal finance is also one of the most practical: knowing the difference between a need and a want, and making spending decisions accordingly.

Alexis Harmon, 25, knows that feeling well. At a stage of life defined by building stability and independence, she found herself wanting sharper tools for navigating financial decisions.

“Being 25 years old and trying to gain stability and independence, I’m wanting to learn more about making smart financial decisions,” Harmon said.

That drive led her to ABEP’s Financial Foundations curriculum, where one idea stood out above the rest: spending patterns matter more than most people realize.

“Spending patterns and decisions can have a huge effect on financial progress,” she said. “How important budgeting is… overspending on wants can cause stress, and having financial discipline will benefit you in the long run.”

The distinction between needs and wants sounds simple on the surface, but it requires honest self-reflection. Needs are essentials: housing, groceries, transportation, utilities, and healthcare. Wants are everything else: dining out, entertainment, subscriptions, and discretionary shopping. The challenge isn’t understanding the categories; it’s consistently applying them when swiping a card or scrolling through an online checkout.

Financial educators often point to the 50/30/20 rule as a starting framework: allocating 50% of take-home pay toward needs, 30% toward wants, and 20% toward savings or debt repayment. But the rule only works if the categories are applied honestly, and if the budget is built on net pay, not gross earnings.

For Harmon, the curriculum prompted a practical shift. “Tweaking my budget, being more mindful of my spending habits, prioritizing needs and savings over wants,” she said of how she plans to apply what she learned.

That mindfulness has a clear destination. Harmon’s financial goals are concrete and personal: building her savings to buy a home after marriage, covering her needs comfortably, satisfying her wants without guilt, and still having money left over.

“Get my savings account at a high number to buy a home once I’m married, have enough to take care of needs, and still satisfy my wants and still have money left over,” she said.

It’s a vision of balance, not deprivation, that financial education is designed to make achievable. And Harmon believes that vision shouldn’t stop at the individual level.

“It’ll set people up for financial success, help people prioritize needs over wants, and keep up financially in this jacked-up economy,” she said of what broader financial education could mean for the community.

In an economic climate where costs continue to rise and financial stress is widespread, that kind of community-level awareness carries real weight. When individuals build the discipline to distinguish needs from wants, the stability that follows ripples outward into households, families, and neighborhoods.

The lesson Harmon and others are learning is straightforward but powerful: financial freedom doesn’t come from earning more alone. It comes from spending with intention, starting with what you need and building thoughtfully from there.

This article is part of the Minnesota Spokesman-Recorder’s Youth Financial Education Series, a monthly initiative covering real-world financial milestones for young adults ages 18 to 25.