America is, for better or for worse, a consumerist society.
Every day we’re bombarded with messages urging us to spend our money on a universe of things. Complementing these nonstop attempts to separate us from our cash rather than saving money — and, perhaps, as a result of it — is the fact that many of us measure success and happiness by how much of it we have.
In the end, the process can confuse our judgment, and nothing reveals that distortion like asking ourselves whether we truly need something we’re about to buy or whether we simply want it. In so many instances the answer is going to be that we want the pricey new sweater, car or cool gadget but we don’t need it. Learning how to distinguish between the two means, we’re learning how to prioritize our personal finances, and when we do that we’re embracing wisdom.
When we do that, we’re building a solid financial foundation for ourselves and for our families as well as priceless peace of mind.
Need is Not Want
Spending money on unnecessary things is extremely common, and it can cause a lot of people a lot of trouble. It’s a phenomenon that occurs in dozens of different ways. While much of it may seem harmless at the point of sale, if you take a step back you’ll see that it all adds up — at the same time that it’s taking away.
A daily trip to the local coffee shop, for example, might see you spend $5 for your favorite pick-me-up and sweet-treat ritual. Start doing that on January 1st and you’ll have spent $1,200 by the end of the year. You could have paid about a third of that, let’s say — $400 — if you’d made your own coffee at home and bought a six-pack of muffins from the supermarket. Did you need to spend that $800 difference, or did you want to? To put it in terms that might make the point more clearly, when it’s Dec. 31 and your year of coffee spending is behind you, do you need that $800 difference in your savings account or do you want it?
If you need it, and most of us do, then you need to reevaluate your morning ritual.
How to Change Your Spending Habits
People who are serious about getting their spending act together will apply the need vs. want test to all parts of their lives.
Do you have a gym membership you rarely use? Or a cable television plan that gives you access to hundreds of channels — but you only watch two or three? Clearly, you don’t need these wasteful contracts. Before you do a point-by-point analysis of your budget, it might be a good idea to check out budgeting software such as Manilla.com.
At the other end of the price scale, maybe you’re looking for a new car and you’ve got strong credit (if you don’t, learn how to build good credit). If you’re tempted to buy a sleek new German prestige car and not a sturdy and affordable Honda, again, frame this major outlay in terms of need vs. want.
The chances that your judgment has been clouded by a glamour buzz are high – as are the odds that it will lead to a major fiscal hangover once the reality of brutal monthly payments set in. If money is an issue and the budget’s tight, then maxing out the credit line is probably not the right call. It is a good idea to keep this in mind during your upcoming Black Friday shopping spree.
No one wants to be a financial house of cards. It’s a nerve-wracking way to live – and sadly, in so many cases it’s avoidable. Evaluating your spending habits in terms of need vs. want is an important way to live within your means, shore up your financial foundations, and rest easy because of it.
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