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One of the hardest financial lessons to learn is how to differentiate between necessary and unnecessary spending.

It’s difficult to fight the urge for instant gratification and to look at the big, long-term picture. But when you do, you’re starting down the path that leads to fiscal responsibility and a brighter financial future.

This is a struggle people of all ages deal with — so if you master it as a teenager, you're financial future will look brighter than ever. 

Define “Need” vs. “Want”

It sounds so simple, but it can be hard to figure out the difference between things you really need and items you just want.

Look at it this way: The only things we truly need are food, water, shelter and basic clothing. If you’ve got those things, most of the other items you’re considering buying fall into the “want” category. This doesn’t mean you can never spend money on a “want,” but it helps to put things into perspective so you can prioritize your spending.

Shop Smart

Now that you know what you need and what you want, learn how to be savvy when shopping for either.

First, always compare prices before buying anything. And avoid impulse shopping by waiting a day or two before buying any non-necessity. If you still want it after that time, then weight it against other wants, so you won’t regret the purchase and wish you had the money for something else later.

And consider making this deal: For every dollar you spend on a “want,” put a dollar away in your MAX savings account for a later need (or a more important “want” you have). 

Discipline Yourself

Learning to live within your means (not spend more than you have) is something many adults struggle with, so if you can master it now, you’ll be ahead of the game when you’re out on your own.

A key aspect is making hard choices. If you want (or even need) something you can’t currently afford, you’ll have to cut spending somewhere else and/or work harder or longer to make more money.

You may need to add a few hours at your job (as long as it doesn’t interfere with school) or take on more chores and responsibilities around the house. Develop a plan to earn the funds you need to purchase that item or attend that field trip. 

Start a Wish List

A good way to start looking at your financial situation in a “big picture” mode is to start a wish list. 

Think about things you want – and look beyond just stuff; think about trips and other experiences too. Figure out what the items and experiences on your list will cost, and put off today’s “wants” so you can save for the things you want even more. 

Use MAX’s “big ticket item calculator” to track your progress and consider opening a MAX Club Account to deposit all the money you don’t spend on frivolous “wants” to save for your wish list.