02 Mar Distinguishing Between Needs and Wants
It is important to distinguish between needs and wants in order to keep your financial goals. There are things that you need to buy in order to survive, but there are others that you just want. Every human being needs air, food/water, clothing, and shelter in order to survive. But even within those categories, there are many wants that are often miscategorized as needs. As you strive to get out of debt, save for a downpayment, or create a retirement fund, it is important to assess your spending and determine what you need and what you want.
Yes, you need clothing in order to survive (and be socially acceptable), but when does clothing become a want? Do you really need 45 pairs of shoes, 28 pairs of pants and 67 shirts? While you do need different outfits — exercise clothes, work clothes (especially if you work in a professional environment), and casual clothes — you don’t need the Kanye West white t-shirt, a Vera Wang suit, and designer jeans. Assess your closet, and decide what you actually wear, and sell the rest. Avoid purchasing future clothing, especially at full price. Shop at secondhand stores or discount stores to get quality clothing at a good price.
You do need a roof over your head and a place to call home. You don’t need a 12 bedroom home for you and your spouse, or even a house on a hill with an incredible view. What size of home can you and your family comfortably live in? Do you really need to have an extra room for a gaming den, or the backyard pool? Be wise when it comes to housing choices, as you can find yourself in deep debt because you wanted more than you can afford.
In order to survive, you need plenty of food and water. You need to eat vitamins, minerals, etc. to stay healthy and strong. However, treats like ice cream or Twinkies, are a want. You don’t need ice cream to survive, but you do need to eat. You also don’t need to go out to eat every day, as you can cook food at home. Even if you do go out to eat occasionally, you don’t need to go to high-end restaurants every time. You can save money on your grocery bill by shopping smart.
Some would argue that we need entertainment in order to survive. In this day and age, that may be true. However, you don’t need to go out to the movie theatre every week, get the best gadgets the day they come out, and own every video game you could ever want. There are many fun and fulfilling activities that you can do for free (or almost free) even within your own town. Go to a local park, attend a public fair, or visit a local museum or landmark. You don’t need to spend a lot of money in order to entertain yourself.