Wants vs Needs

May 28, 2008

in Finances

Advertising on Times Square, New York City

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For a lot of people “need” and “want” have come to mean the same thing. All to often we are being programmed from an early age to believe that wants are needs. Rather than being guided by our heads when it comes to purchases, we are guided by our hearts.

We need food, shelter, clothing and love. We want most everything else. Over and above the basics for survival, this will vary from family to family. But I’m sure many of us could quite comfortably get by on much less than we think.

Our predicament

Until recently, as the “grown ups” in our family, The Thinker and I never really considered want vs need in a conscious way when making purchasing decisions. As a result we ended up living beyond our means. If we wanted something and there was enough credit left on our cards, we’d buy it regardless of what else we had to pay for that month.

Hmm, those new Macbooks look nice. I need a new computer, I think I’ll get one of those.
I need a bike to ride to school with the kids. I’ll go to the sports store tomorrow and order a new one.
The Thinker is doing a lot more driving around for work now. We need to get him a brand new car.

Are we better off?

These are all things The Thinker and I have said to ourselves and followed through on in the not too distant past. Somewhere along the decision making process the new, expensive things became absolutely necessary to us. Did these things make us any happier and our life any easier?

Well, I love my Macbook, but I could have got by with my old PC. We probably walk to school as often as we ride, and secondhand good quality bikes are going for a steal in the paper every weekend. And as terrific as the new car is, we could have saved thousands of dollars on a good quality second hand car. All these things are nice but they also got us a chunk of debt.

Then there’s the kids. There are the sports and activities, the latest “educational” toys, the clothes, the parties…the list is endless.

Who’s to blame?

Why did we make the decisions to buy these things? I guess we could blame the media. All that advertising showing us the latest shiny thing that we simply must have in order to get by in modern life. I guess we could blame the banks. They keep sending us automatic credit increases and are quite willing to let us draw on the equity in our home. Could we blame our peers?

Look, the Jones’ have a great plasma that they picked up for a steal. I think we need a new TV.

The secret

At some stage though, we need to take responsibility for the decisions we make. It is up to us to gather the information needed to make a proper judgement of what we really do need. Then if we have some cash left over, look at the wants.

Now, instead of making impulsive purchases we look at our budget. We ask ourselves if we can afford the purchase. We ask if we really need it. If it gets relegated to a want, we ask do we want it enough to use a hard saved x dollars.

This has been an amazing process. As you’d probably guess, most things that we put through this approach have been put in the “wants” basket. The amazing part is, that after something has been in the “wants” basket for a little while, we find out that we didn’t really want it all that much in the end anyway. How magic is that?

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