How Want Versus Need Can Easily Impact Your Finances

Want versus need boils down to basic economics. The difference should be obvious, but reading articles online about finance, it is apparent that many people can not grasp the meaning of either one or both.

This lack of distinction could be attributed to either one of these two things.

• Ignorance
• Defeat

Ignorance: This often means being completely unaware of the effect on their lifestyle on their financial future. They just assume it’s the way everyone lives.

Defeat – being aware of the impact of the reckless lifestyle but feeling powerless to do anything, and therefore resigning themselves to losing.

The end result for both is the same, a big detrimental impact on their financial future. Here is how you can differ between the two and take steps to correct past mistakes.

Want versus Need: Identify the emotion

A “need” is defined as something that is needed to survive. The first thing I think of is food. You need it to live. Shelter, Water, Air. All these are things you actually depend on for life to go on. Of course, there are many layers to this.

For instance, it’s a fact that food and nutrition are essential necessities for life. One might argue that you need meat (maybe not filet mignon though, because it’s an expensive purchase, and if you can’t afford it, you shouldn’t be buying it.). A vegetarian would oppose that as they are living proof that you can exist without meat. This, however, does not take away from the fact that food as a whole is a necessity.

A “want” on the other hand is defined as something one desires. It is not something that is necessary to sustain life. Lusting after things is something that we all experience at one point or the other.

You might want a new car or shoes. They might or might not be attainable, but they are not crucial things. You won’t die if you don’t get them. That might be a bit difficult to make kids understand of course. I’m sure a lot of parents are familiar with kids crying and saying things like:

“I’ll die if l don’t have the new iPhone, X-Box, ” and a million other things.

Related Reading for youngsters to teach them about money management because it’s never too early.

While we are quick to assure the kids that they will not die without those playthings, it’s amazing the number of adults who can not show the same strength when it comes to their own spending. There comes a time when you have to start saying “NO” to yourself when the urge strikes to pull the trigger and spend.

Say no to that phone upgrade and save hundreds of dollars.

Say no to the concert tickets that cost $100 or more.

Say no to a new car. That new car smell goes away pretty quickly and you’re stuck with $ drained out your finances.

Say no to that expensive lunch or dinner with your rich (at least on the outside) friends.

Say no to opening another store charge card. It’s easy to get sucked in. While you’re at it, say no to the “sale” items in the department store. I know it’s a hard one because shopping is a pastime for most people. It’s a trap designed to part you from your money.

Your big screen TV is just fine, there is no need to upgrade to the new 4K. Trust me, you don’t want to see all those actors that clearly. They have zits just like the rest of us, which takes away some of the mystique :-).

You might also like this post:

Misconceptions destroyed.

Want versus Need: Compromises

Once you start to differentiate between your needs and wants, it becomes easier to save your hard-earned money. This can only lead to better decisions. Your want versus need might be to spend $300 on a solid washer instead of $950 on a fancy top loader if you consider that a need. This will effectively impact your finances in a very positive way.

You could start a “Fund Jar” with all the extra money and use it to pay down debt like a school or car loan. A friend of mine carries around a picture of her dream house in her wallet. Whenever she feels the need to spend foolishly, she takes a look at it and this helps her focus on the big picture.

There will most likely be a constant internal struggle while you figure things out. The old saying of Rome not being built in a day applies here. This will be a new way of living and will require adjustment. It gets easier to adjust, and before you know it, it becomes second nature.

The most important part is not to blame yourself in case you backslide but to dust yourself off, and get right back into it. It is also important that you pull your family in with you. Not only with the support be helpful when it’s a joint effort, but you also start to see the gains quicker.

Keep notes for motivation:

Sometimes, having a visual prompt can be quite helpful when trying something new. A good idea is to write things down. Have a want versus need itemized list, and utilize it. In one column, write what the desired item is, along with the approximate cost.

On the other side of the column, write down what your essential needs are. Work on your needed list and definitely acquire those first. One of the things you might discover is that the items you actually need are not that much, and everything else is pretty much fluff designed to chain you to work and a lifetime of work.

There is no quick path to wealth unless you’re fortunate enough to build the next must-have (which in reality means just another frivolous time-wasting thing. As if the world didn’t have enough 🙂 ). Most people have to work hard, save, and hopefully retire in comfort.

Have you learned to say “NO” to yourself? How do you handle your want versus need dilemma?

Save

Save

Save

Save

Save

Save

Save

Save