“We need to get new furniture for the living room.” Have you ever said something like this? Have you ever thought that you needed something even though it was probably more of a want? I know I have been snared in this trap before.
It is very easy to lose touch with reality and think that we need the new style or the new design. Normally, this mode of thinking is not a major issue. However, in hard times like what we are experiencing, our thought process needs to be altered slightly. We have to redefine our wants and needs.
The lack of a solid definition is what put many of us in the financial trouble that we are in today. We used our credit cards to buy things we didn’t need, and in turn racked up a balance we don’t want. I am going to be Debbie Downer for an article, but it is something I want to touch on this week.
Wants are the things we can do without for awhile or at least until we save enough money to buy the articles. Do you really need that new iPod enough to charge it to a credit card? Needs are the things we must have to live out our daily lives. Needs are what we use our emergency funds on, like a new transmission or food.
I used to keep a list of all the things I wanted and needed. There were two columns. Whenever something came up I placed it on the list. Then I determined what I wanted the most and what I needed the most.
On pay day, I would buy whatever I needed first. Then I would work my way down the line of the want column. If I didn’t have enough to cover all of the needs right now, then I dug into the nest egg.
When I wanted something really expensive, I would save the money left over after the needs were handled. The next time around I just might have enough to be victorious. This system worked great for me for years.