Day: January 13, 2016

Budget Bootcamp Day 12:Needs Versus Wants

budget bootcamp day 12 needs vs wants
Needs vs. Wants

Sometimes, some of my client’s have a hard time distinguishing their needs versus their wants. Take for example eating out every Friday. That was something my husband and I used to do. It was simply because I did not feel like cooking on Friday, after a long week at work. We both looked forward to the time we would would spend together on our date night, but the flip side to that was that eating out every Friday was expensive. The question we asked ourselves was is this something that we need to do or something that we want to do? William answered it was a want, while I answered that it was a need. I needed that break from the kitchen, WE needed to eat, I needed to spend that time with him and most of all, I needed to feel luxurious. (Don’t judge me, I have an exotic pallet lol) Sadly, our society has become great at blurring the lines between needs and wants, and that is exactly what I was doing. To be successful in your cash flow management, you need to be able to differentiate between the two. You need to be able to thoroughly scrutinize the wants and find more opportunities to cut back on your spending. Needless to say, I lost the argument, eating out every Friday was definitely as want. However, we were able to compromise, we eat out one Friday a month and the other four Friday’s I cook a fabulous meal that satisfies my pallet.

The best way to easily identify your wants is to start with your needs. Needs can be broken down into two categories: absolute necessities and near necessities. Absolute necessities are your food, clothing and shelter. Near necessities are: reliable transportation, insurance (property & casualty, medical and life), utilities, personal care expenses and childcare expenses. Now while these are needs, they are not absolutely necessary for you to survive, they are are important for us to function in society.

Wants are everything else that could be cut out if you have to. True, wants can be found in the previous categories I listed. Of course we have to eat, but we don’t need to eat out all of the time. We need shelter, but we don’t have to have the most expensive home or apartment out there. The same goes with clothing, we don’t have to have designer labels on all of our clothes to survive. So within each of the needs categories, there is always room to cut back.

As I told you, my husband and I compromised. We now eat out one Friday a month, because eating out was not necessary for us to survive. This was one way we were able to cut back on our spending. Besides, I am a really good cook and it is much cheaper for me to purchase the ingredients and make the meals myself. I still get to spend time with my husband, because I tell my family that on Friday nights no one can come over to visit. This is our time and we take it seriously, because we NEED that time together.

By no means am I suggesting that you cut out all of your fun, because that will never work as a long-term solution. What I am suggesting is to realize that there is a difference between needs and wants, and that many of your wants can be cut out if money is tight.

Your assignment for today is to make a list of your needs vs your wants, I have included a printout for you to do that.

I’d love to hear from you, what did you learn from today’s assignment? What are some things that you can eliminate to save money? Comment below.