Financial Needs vs. Financial Wants

Financial Needs vs. Financial Wants

February 28, 2017

My daughter recently gave a presentation to her kindergarten class about the differences between needs and wants. As a dad, and a financial advisor, I’m glad my daughter and her classmates are thinking about these things so early in life. All of us, no matter what age, sometimes struggle with determining the difference between needs and wants, especially when it comes to our money management. Today, let’s take a look and compare some financial needs vs. financial wants.  

Insurance vs. Investments

Many people are enamored with what their investments can enable them to achieve – buy a house, retire, pay for education, etc. However, if you haven’t done proper insurance planning, the money you’ve worked so hard to save can be wiped out due to unforeseen costs. When it comes to building towards your future, it’s important to have a defensive mindset and build on a stable foundation. As tough as it may be to allocate some of your savings towards insurance rather than towards your investments (because doing so means reaching your tangible goal of a house, retirement, etc may take longer now that some of your money has been diverted towards insurance), insurance planning is essential in protecting the money you’ve worked so hard to accumulate.  

Retirement vs. College

People need to save for retirement and want to save for college, but in practice, many see it the other way around and implement their savings strategy accordingly. It’s natural for parents to put their children’s interests ahead of their own, and while saving for retirement rather than saving for college my not initially seem so, it may actually be in your family’s best interests.  After all, if you don’t have enough saved for retirement, the support you may need could ultimately fall on your children’s shoulders and create future financial burdens for them.  

Remember that your children can borrow money and earn scholarships for their college education, but you cannot do either of these for your retirement. Additionally, if you place an emphasis on saving for retirement and have enough money to one day be financially independent, you could always choose to use some of your retirement money to help your children pay off their student loans – that way, you have more flexibility with your money.

Planning Ahead vs. Operating on a Whim

Planning ahead starts with a budget.  Having a budget can alleviate a lot of stress in your life and help you feel more in control of your finances, especially in face of uncertainty such as being laid off or unemployed.  Unfortunately, budgeting gets a bad rap – most people look at it as a chore. I like to look at budgeting as creating a plan to live the life you want. Budgeting and good financial habits will allow you to prioritize what really matters and make your goals a reality.  

Budgeting isn’t just something you do when you’re starting out in life– it’s important when you’re retired or planning to retire as well. Knowing how much of your salary is covered by your investments and making the appropriate adjustments to expenses is key during retirement if you want to stay retired.  

There’s Help

Sometimes it can be difficult to choose between financial needs and financial wants. Making sound financial decisions takes time, research, and discipline, and it can be tough to do on your own. A financial advisor can help guide you through the needs, wants, and everything in between. I’d appreciate an opportunity to discuss your financial goals and how you can reach them. To set up a meeting, call my office at (949) 221-8105 x 2128, or email me at

About Mike Loo

Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to provide a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation. Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Trilogy Capital, a registered investment advisor. Trilogy Capital and Trilogy Financial are separate entities from LPL Financial.