Understanding the Difference Between Needs and Wants
One of the most basic concepts when it comes to saving money is that we must learn how to determine our needs and wants. No matter where you seek financial advice, you’ll see or hear that seemingly simple concept over and over again.
At first glance, it does seem simple. Our needs are the things we must have to sustain us day to day: food, shelter, clothing, personal care items, and in most cases safe, reliable transportation. Just about everything else can be classified as a want (though might seem like a need) – entertainment, electronics, leisure travel … the list of things we want is potentially endless.
But even within the needs category, the lines can blur. We must have food every day, but we don’t need to dine out to get it. We must be fully clothed to go out in public, but we don’t need the latest fashions to stay within the bounds of decency.
We’ve become a culture of want, addicted to the rush of newness and convinced it’s the road to happiness. So how can we stop wanting so much, and appreciate simply meeting our needs? Here are a few ideas.
Look around and evaluate everything you already have. Chances are you’re far exceeding your basic needs in almost every area. Work on cultivating a grateful attitude and appreciating relationships and experiences, more than material things.
Advertising — in all its forms — is designed to make us want. Avoid it as much as possible by unsubscribing from retailers’ promotional emails, recording television shows and skipping through commercials, and carefully choosing the online content you consume. Break the habit of going digital ‘window shopping’ when you’re bored. Also be aware of how you respond to ads in your social media feeds. They are designed to make you buy without thinking about it. If you see something you’re interested in, take not of it, but wait to buy. Chances are you won’t even remember it tomorrow.
Practice the One-In-One-Out Rule
Successful minimalists live by this concept. It simply means that any time you bring a new item into your home, you must get rid of one that’s the same or similar. So, new pair of shoes, old pair of shoes out. New baseball cap in, old baseball cap out. You get the idea. It will be easy at first, since most of us have plenty to get rid of. But as you pare down your stuff to items you truly value and enjoy, you’ll be less inclined to toss them for something new. One-in-one-out is an effective tool for managing needs vs wants.
Factor in Hidden Costs
Often we purchase something new without thinking of the additional costs we’ll incur as a result. That shiny new vehicle is gorgeous, but what about the added costs of higher registration and insurance rates? The fancy new phone sure looks fun, but does that new data plan fit with your budget? When you stop to think about the total cost of something, you might discover you’re perfectly content to keep what you already have until you truly need something new.
When you start thinking about potential purchases in terms of needs and wants, you’ll start making more thoughtful buying choices. Another helpful trick is to think about potential purchases in terms of hours worked. Once you figure out how many hours of your labor it takes to purchase an item, it might not be so appealing after all.