Wants versus needs - MoneySense

Wants versus needs

Staples are a need. Shrimp is a want. Do you even know the difference?



I’m always amused when people start describing how much more focused they are on wants and needs, and then roll right into telling me how their personal trainer, weekly manicure and smart phone are all “needs.” Hey, if you can afford to have someone paint your toenails or blowout your hair, you’re well within your rights to have those things. But let’s not delude ourselves. They aren’t “needs” no matter how many times you say it. They are wants.

So, do you have wants that are getting in the way of saving? I bet you do. Take my challenge:

For the next two weeks, write down every penny you spend. Every penny. If you drive-thru, write it down. Picked up a newspaper, magazine, or latest DVD release, write it down. Grabbed a candy bar in the middle of the day, write it down. At the end of two weeks, look at your list and identify which spends were on needs and which were on wants. If it kept a roof over your head and the most basic of food in your tummy, it was a need. Staples are a need. Shrimp is a want.

If it was an impulse purchase, a self-indulgence, or anything you did not HAVE to pay for immediately—you could have deferred the decision to buy by a couple of days—it’s a want. Highlights may make you look good, but they are a want. Anything you could have borrowed (books, magazines, DVDs) is a want. Take-out, lunch out, dinner out, all wants. Replacing anything that wasn’t broken … want. Luxury anything … want.

Okay, what’s your ratio? I’m betting you’ll be shocked at the money that just leaks out of your cash flow.

Are you willing to do without some of those wants to come up with the money to save a little sumthin’ sumthin’ for the future?

Follow these four tips to keep your spending in line:

• Suspend anything you currently pay for which you can do for yourself.
• Borrow instead of buying.
• Stay out of shops and stop the catalogues and deal-of-the-day emails that keep coming at you.
• Eat well at home, don’t eat out, brown-bag for lunch.
• Hold on to your stuff for longer. If it ain’t broke, don’t replace it.