Needs vs. Wants when budgeting.
n today’s culture, we have more ways to spend our money than ever before when it comes to food, clothes, cars, entertainment, phones, travel, and more. The list goes on and on which can surprisingly add more stress and feelings of being overwhelmed to even the simplest budgeting decisions. One thing that may help when deciding how to spend your hard earned money is mindfully determining whether a purchase is a “want” or “need.” This is even more important to do when living paycheck to paycheck. Using a simple mindset can suddenly make a decision very clear. Here are a few thoughts or suggestions when deciding to make a purchase or waiting it out instead
*Remind yourself of how very little a person really needs in order to survive. By taking it to a basic level of survival, it becomes rapidly clear that most things in life are “wants.” “Wants” are things that bring us (temporary) pleasure or bring external enhancements to make life fun or easier. The truth is that for basic, necessary daily living the requirements are few: shelter, food, water, clothing and hygiene, and that is what you should budget for. The rest of life tends to become overly complicated, oftentimes by choice.
*Many times we make an impulsive purchase because we think we are getting a good deal, feel a sudden thrill of excitement over a purchase or make a decision based on an emotional reason (loneliness, sadness, etc.) thinking a “possessions” will make us feel better. In truth, sale items typically are on sale for a reason (oftentimes not a good one) and the high from a purchase especially one we cannot afford in the first place, is extremely short-lived.
In turn, once the high wears off, you are left craving more, feeling guilty or having purchase remorse. Then so many people want to regain that high by making another purchase with their hard earned income...it is end endless cycle and running into that type of spending and debt is one type of a self-destructive behavior.
*Another mindset is to think about how much you would have to work in order to pay for the item in question. If it comes down to hours of work or a full day of work, is it really worth buying in the first place, especially if you already have strained finances? Is working X hours really worth that material item? This is critical to learning how to budget and what to spend your money on.
*If you feel so inclined to make a purchase, especially when you are struggling financially, give yourself space to think about it first. Leave a store, don’t click on buy or take a walk to distract yourself. Oftentimes, the feeling of “want” dissipates rather quickly and in its place comes feelings of empowerment and satisfaction, knowing you saved your hard earned money for truly vital things.
*Making purchases like a new car or expensive purses or clothes often comes from the desire to impress other people or to keep up with society. If you truly think about it, you are spending money to impress people you probably don’t even like or know in the first place. Don't try to keep up the the Joneses.
Placing an emphasis on your health, your family and true friends-the people you really care about eliminates much of the need to impress. By changing your mindset, you realize “wealth” comes from loved ones, having robust health and creating happy memories and moments which you cannot buy and that last for the long haul.
*Owning or purchasing things you cannot afford on your budget leads to tremendous feelings of insecurity, guilt, shame and unrest. Living within your means or ideally below them, brings about huge feelings of power and confidence. It feels truly spectacular to be able to pay your bills on time, have food in your fridge, a roof over your head and security for yourself and your family. Saving money is even better as you will be prepared for unexpected financial emergencies and for your future.
*Be sure to pay yourself first. This is something I learned at a young age. If you take this mindset, if can really help you decide what is a want vs a need. Pay yourself first (and ideally a good "chunk" of your earnings), then buy the needs, and only then (if you have anything left over) purchase some of those "wants". Budgeting 101!
*Take a good, hard look at your finances and possessions. The truth is typically laid bare when you face what you make verses what you are really spending your money on. It is often surprising how $5 here and there can add up to hundreds of dollars over the course of a year.
Focus on simplifying your life and home as much as possible. Unless you can honestly truly afford it (which most people can't), you don’t “need” new clothes all the time, you don’t “need” a new car if the one you have gets you safely from point A to point B, you don’t “need” to eat out three meals a day, etc. Take time to reflect on how you are really living. Once you face the truth, financial solutions can come about much faster.
*Many Americans are living paycheck to paycheck and swimming in credit card debt. Do not be fooled by those that live a seemingly lavish lifestyle. Wealth and lack of wealth are often disguised and deceptive in appearance. Save and invest, especially from a young age so you can benefit from compounding.
Someone who lives in a smaller, modest house or drives an old car, may be able to retire at a young age or have tons of funds saved up while the person who constantly has a new piece of jewelry or a new car, may have maxed out credit cards or be living right on the edge of financial disaster. Do not get caught up in the comparison race or superficial appearances in society.
*Some agencies can help you identify what is a want or a need. They can help you budget and teach you the skills. There are professionals to contact for advice. One of the services to try would include non-profit credit counseling, and the agencies can be reached at the following.
Remember that living a safe and secure life does not require vast wealth. Many financial experts will tell you to prioritize your health and loved ones first before things. In addition, when you do become mindful of your spending, budget properly and exercise financial discipline, you become free. With that hard earned freedom, comes the flexibility to treat yourself to some “wants” without any fear, guilt or shame because you can truly afford it. Those “wants” than become infinitely more pleasurable because there are no strings attached.