Today I'd like to talk about Need versus Want. Understanding the difference is, in my opinion, the most basic step in any endeavor to save money.
Very simply put, Need is a requirement, Want is a desire. Learning to distinguish a Need from a Want will enable you to make decisions that will keep more of your hard earned money in your pocket.
We would probably all agree that Food, Shelter, Clothing and Transportation would be classified as Needs but would you also agree that they can also be Wants?
For example, we all need to eat. There is no exception to this rule, if we didn't eat we would die. Food is without a doubt a need, going to a 5 star restaurant for that food is a Want.
We all Need Shelter. It is when we expand on the basic 4 walls and a roof that it becomes a Want.
It is the same for clothing. We could run around naked all day long inside our 4 walls but when we interact with the outside world we have the issue of modesty, not to mention it's illegal most everywhere to run around with your junk hanging out. You might look fabulous in a pair of Gucci sneakers that cost $105 but wouldn't a pair of $35 Converse also cover your feet?
Are you seeing a pattern here? If we can distinguish Need from Want we will immediately have the power to save money. What are your financial goals? Are you saving for your kid's college education or perhaps to buy your first home? Maybe you just need to stretch your dollars further to keep up with rising costs. Every purchase we make affects our ability, or inability, to reach those goals.
This is not about Wants being a bad thing, I believe everyone should indulge in the things that bring them joy. It is when we overindulge that our financial health suffers. There is much truth in the phrase "too much of a good thing".
Next time you are faced with a purchasing decision consider whether it is a Need or Want and how it will affect your financial goals. Shifting your spending focus away from the Wants and concentrating on the Needs is an easy first step in reaching your goals.
Some very good points here. We all want things but sometimes we are just greedy. We need to simplify our Needs from our Wants and set limits on the wants. We need to think about what we want in the future when we get older and that's the hard part. I fight this every other week(pay period)lol seems like we spend twice as much the first week when we get payed and then reality set in the next we're almost broke again. What has helped us was skipping the high dollar restaurant every two weeks and made it more special by going out to that 4 or 5 star once every 2-3 months or just on special occasions like Anniversary's or Birthdays. Another thing that has helped us is by shopping for better deals on things don't buy the first thing you see shop it try Amazon or E-Bay or even Pre-owned instead of new like buying that new car. Pre-owned cars are much better on the wallet as long as you shop smart try Certified Vehicles they are less money and some times the warranty is better than new and you don't lose 15-22% over the curve like a new one.
ReplyDeleteWe are also paid biweekly, it is a challenge to not run out of money between paychecks. This sounds like a good topic for a future post. Thank you for your comment!
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