While some bad habits, like passing gas in public, are totally gross but certainly not life-threatening, bad spending habits can easily destroy you. Bad spending habits don't usually go away as you get older, which is why they call them habits. In fact, bad spending habits usually get worse with age. That's why a lot of people I know make tons of money each year, yet they are just about broke at the end of every year. These people will never be able to retire. They will work until the day they die. Bad spending habits can cause big problems in life.

Why do some people develop bad spending habits? Are they stupid? Are they uneducated? Are they idiots?

No, most people who develop and then continue to have bad spending habits are simply confused. They do not have a grip on the difference between needs and wants. And people who don't have a clear understanding of the difference between needs and wants usually struggle with financial problems for the rest of their lives.

What are your needs? What are your wants? For that matter, what is a need? What is a want?

A need is something that is necessary in your life - something that may be difficult or uncomfortable to live without like food, clothing, or a place to live. On the other hand, a want is something that is not necessary in your life but rather something you would like to have. This is one of the most important concepts that we will address in this book. Young people who understand the difference between needs and wants have a huge head start on the road to financial success.

"I need some new pants to wear to school."

"I want a pair of $150.00 designer jeans to wear to school."

Don't get me wrong. Having a few wants in your life is not a problem. Sometimes, wants can be a great motivating factor in accomplishing a goal. The key is not to eliminate wants but rather to keep your wants under control. The danger with wants is that the more we get and the older we get, the more our wants tend to grow. And, as they grow, they also get more and more expensive. That's when the problem gets serious.

"I need transportation to get to work."

"I want a brand new Lexus SUV to drive to work everyday."

Too many wants can be a dangerous problem that can sneak up on you when you least expect it. People who get confused about wants and needs usually get caught in a vicious cycle. First they start spending some of their hard-earned money on stuff that they really could live without. Then, as their wants continue to grow, they start spending too much of their hard-earned money on things that are not really necessary. And finally, people whose wants are totally out of control begin to spend money that they don't even have on stuff they definitely can't afford.

This is where it really gets dangerous - more dangerous than you could ever imagine - because people who spend money that they don't have on wants enter a world that almost always spins out of control. It's like playing a game that you have no chance of winning. It's dangerous. It's scary. It can even be deadly!