Do you know the difference between wants vs needs? I have been thinking a lot of this here recently. I tend to struggle with this from time to time. A want is something you would like to have. For example,I would really like to have a Dr. Pepper. The real question, is do I need it. A need is something you have to have. You need a roof over your head, food/water and clothing. Today, I am going to discuss how to find the balance between these two areas and hopefully change your mindset a little when evaluating the importance of material items.
Most of us struggle to conquer our wants. How many of us have convinced ourselves that we need that new pair of shoes or that expensive trip. I hear people all the time say they deserve it. Deserving it does not give you a free pass to buy whatever you want. You have to have balance or you will never be able to reach your financial goals.
Now listen, I am guilty of spending money on things I do not really need. I am far from perfect. My wants are mainly soda (Dr. Pepper) and movies. I have always enjoyed movies and I buy several of them every month. I have amassed a pretty good collection. I have even tried convincing myself that the movies are an investment because I will need something to do during retirement. I know what you are thinking, but do not take this away from me. Let me believe this one thing.
When it comes to needs or necessities, I think I do much better. We have to have food/water, utilities and clothing. I do not spend lots of money on food because the foods I like are generally cheap. For example, I hate anything that involves seafood and we all know that cost a lot of money. I basically live on pizza and chicken. Probably not the best diet, but it is cheap. When it comes to clothes, I like to shop at thrift stores or go to Ross Dress for Less. I am still wearing clothes I bought 10 years ago, so I think I am doing fine.
I think the real lesson when it comes to wants vs needs, is finding the right balance. I do not consider myself an extreme saver and I am not willing to suffer to save at this stage in my life. I did that when I was younger. My wife and I, however, do save about 40% of our income each month, but I never feel like we are going without.
I always try to treat our savings goal each month as though it is a bill. In my mind, we have to save at least $2,000 per month no matter what. I know that later on I will be able to adjust that once we stop having to pay for daycare and will be able to save even more. Honestly, most months we surpass this amount.
Now, can I cut back a little on movies and pop? Absolutely, and I will slowly do that, but giving it up completely is just something I am not willing to do. If these two items got in the way of saving that $2,000 per month I would make the needed changes. However, I do not feel that will be needed.
Do you feel like you have the right balance when it comes to your wants and needs? What are you willing to cut back on? I found a pretty good website that has various worksheets on wants vs needs. The site is Printable Worksheets. I would check it out.