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Last week we talked about starting an emergency fund to help pay for unexpected expenses to help keep us afloat during times of financial hardship.  Today at Ramoney we’re going to talk about differentiating between wants and needs to help develop responsible spending.

Needs are something that you need to survive, examples include:

  • Food: Pretty self-explanatory.
  • Water: Ditto.
  • Air: Still free at the time of this writing :)
  • Shelter: A place to protect you from the elements and keep you safe.
  • You need it to live

 

On the other hand, it’s probably a want if:

 

  • You saw it on TV
  • You want one because your friend has one
  • You need to buy extended warranty for it
  • You buy batteries for it
  • You pay membership fees
  • It’s programmable
  • It’s customizable
  • It’s upgradeable
  • It has a standard edition
  • It’s rechargeable
  • It’s an accessory
  • It has accesories
  • It has a special edition
  • It needs a remote
  • It comes in different colors
  • It comes in different flavors
  • It has a platinum edition
  • It’s in standard-definition
  • It’s in high-definition
  • You can live without it.

 

It’s hard sometimes to differentiate between the two as things can fall into a gray area.  In the days of my exuberant consumerism the gray area of this subject was the size of Canada:)  Now when I see something that intrigues me, I sleep on it.(Literally!  I write it on a piece of paper and put it under my pillow to look at again the next day.)  Usually it takes me 1 to 3 days to decide if something is really a need or merely a want. 

A friend of mine actually has a slip cover on his credit and debit cards that needs to be removed before he can use it to help him think about his purchases fiist.  Also he has a little note on them that asks him, “Do you really need it?”  He says it’s very effective.

Doing so helps alleviate the emotional jolt that is associated with wanting something in the beginning.  Your product lust wanes and clarity returns.(or some semblance of ^_^) 

  • Do I want an Iphone?  Yes.  Do I aleady have a phone, PDA, and ipod?  Yes.  So do I really need an Iphone?  No.
  • Do I want a brand new Mercedes C350 sport sedan?  You betcha.  Do I already have a car that gets me around that is paid for already?  Yes.  So do I really need a new Mercedes C350 sport sedan?  No.
  • Do I want a brand new plasma TV?  Yep.  Do I already have a TV that I can watch my favorite shows?  Yes.  So do I really need a new plasma TV?  Nope.

 

And at the same time, you can re-evaluate what trully is important in your life.

 

  • Spending time with friends and family?  Check.
  • Exercising and eating right for a healtier you?  Check.
  • Learn something by reading a book, trying new things and subscribing to this blog?  Check, check, and check.

 

Now I’m not suggesting to give up wanting stuff entirely as that is just not healthy.  As with extreme dieters that can rebound to do binge eating.  Binge spending can afflict you as well if you attempt to cut it off altogether.  Doing it from time to time is ok as long as you practice moderation.  The goal of this article is to have you look at your spending habits to become more fiscally responsible.  Cut through the noise, focus on what’s important, save some money.

Thanks for reading.