Wants vs Needs
Posted by Gail | Filed under Bad Habits!, Money Management
I’m always amused when people start describing how much more focused they are on wants and needs, and then roll right into telling me how their personal trainer, weekly manicure and smart phone are all “needs.” Hey, if you can afford to have someone paint your toenails or blowout your hair, you’re well within your rights to have those things. But let’s not delude ourselves. They aren’t “needs” no matter how many times you say it. They are wants.
So, do you have wants that are getting in the way of saving? I bet you do. Take my challenge. For the next two weeks, write down every penny you spend. Every penny. If you drive-thru, write it down. Picked up a newspaper, magazine, or latest DVD release, write it down. Grabbed a candy bar in the middle of the day, write it down. At the end of two weeks, look at your list and identify which spends were on needs and which were on wants. If it kept a roof over your head and the most basic of food in your tummy, it was a need. “Staples” are a need. “Sushi” is a want.
If it was an impulse purchase, a self-indulgence, or anything you did not HAVE to pay for immediately – you could have deferred the decision to buy by a couple of days – it’s a want. Highlights may make you look good, but they are a want. Anything you could have borrowed (books, magazines, DVDs) is a want. Take-out, lunch out, dinner out, all wants. Replacing anything that wasn’t broken… want. Luxury anything…want.
Okay, what’s your ratio? Imma betting you’ll be shocked at the money that just leaks out of your cash flow.
Are you willing to do without some of those wants to come up with the money to save a little sumthin’ sumthin’ for the future?
- Suspend anything you currently pay for which you can do for yourself.
- Borrow instead of buying.
- Stay out of shops and stop the catalogues and deal-of-the-day emails that keep coming at you.
- Eat well at home, don’t eat out, brown-bag your lunch.
- Hold on to your stuff for longer. If it ain’t broke, don’t replace it.
If you’re finding it hard to not shop, it may simply be that you’re not busy enough. It’s so easy to fill our time with shopping. It’s much more productive to fill our time with meaningful activities: health-related, volunteering or working more to make more money.
It’s also easy to confuse the nice-to-haves with the must-haves when you’ve got time to kill and money to burn. But if you’re burning the money you’re going to need later – for an emergency, to deal with a challenging life change, to see you through retirement – it’s time to let go some of your wants now so you can meet your needs later.
March 18, 2013 at 6:20 am
Just made a need vs want list the other day:)
Needs won this round. Wants will come in time!
March 18, 2013 at 6:41 am
Been doing that for the past two years to save money to replace my car eventually. When a guy ran a stop sign and totalled my car last week, it was so nice to know that there was money there to replace it, instead of being at the mercy of when the insurance company finally decides on the total loss value of the car.
March 18, 2013 at 6:55 am
Was being very frugal, then had a shopping trip this weekend. I needed an article of clothing (yes, need, as in undergarments and mine are wearing out), and bought shoes, sandals, and tons of stuff for the children. I was feeling guilty as they hadn’t been in a mall in months, and they’ve been getting rid of clothing right and left, and their most recent clothing has been second hand, and it’s been awhile since they’ve received any. Sigh. They are teenagers, and they’re girls. And, it’s not like we can’t afford it, but currently we are living off savings as we put hubby’s entire cheque each week towards a trip, and my cheques are paying off the last of the mortgage. It’s all comes out the same in the wash, and our savings are depleting regardless (whether it be for mortgage, trip or clothing), and everything will be replenished, I just hate seeing balances go down.
March 18, 2013 at 7:57 am
We’ve done this for 35 years! Combine this with putting a set percent of income into savings every month (before spending anything) and we’ve always felt secure and in control of our money.
March 18, 2013 at 8:03 am
Cas you are right on.
It is funny to see the wants vs needs.
I have to buy undergarments as well, before the band separates from the bottom.
As well my feet are hurting and could use new shoes. However, I am trying to make it until the good weather for my spring/summer shoes. (go away winter!!!)
I did budget for dinning. For me it is not eating out but, snacks.(unless family special event, no choice there) Our extended family has smarted up and started doing meals at a central family members house and we all bring one item. Although Gail has made a good point I should cut out the snacks and my belly will thank me as well to shed the winter weight gain.
March 18, 2013 at 8:20 am
I have evolved my budget into categories that are easier to distinguish wants vs needs (eg. eating out vs groceries). It’s not perfect but with historical information it is very easy to track my position.
Eg. Say grocery budget is usually $400 a month and I spent $500 – obviously I bought some extra “nice-to-have” grocery items.
I think the first steps in becoming financial-effective are the spending tracking and the “want vs need” analysis.
I’ve been doing my budget for a few years now and it truly becomes more intuitive with time and practice! Don’t have to think much anymore as long as I make sure to keep updating and tracking to ensure I don’t get out of control.
March 18, 2013 at 10:15 am
When my girls were shall we taught them the difference between “wants” and “needs”. Getting into the car to go shopping we would let them know “this is a needs shop”. They would rarely ask for anything while we were shopping and if they did I would simply say “not today, this is a needs shop”. No whining, no complaining, no public meltdowns. On the rare (perhaps 3 times a year) occasions I would announce “this is a Wants Shop”, they would be thrilled. I would let them each choose one or two “treats” and they would be satisfied. BTW the them a treat would be a bottle of juice or a lunchables or box of chocolate coated granola bars.
My oldest daughter, now in first year University ,has determined that she “needs” a new computer. Her laptop (bought with her own money) is 6 years old and slowly dying. She’s replaced the battery , replaced the power cord and her fan is no longer working so the whole thing is constantly overheating. She’s decided to watch the flyers and do on-line research to help her decide what to buy (again with her own money). She’s decided that although she really does “need ” it, having a new computer right this very second is a “want” so she is determined to use her computer til the bitter end. She’s hoping it will last til she’s worked the whole summer and put money aside for it (she doesn’t want to use her savings if she can help it) and wants to use the back to school sales in September technology to get the best price.
March 18, 2013 at 10:22 am
I so rarely spend on wants it’s kind of funny. Probably because I HATE being inside malls and there are so many more interesting things to do online then shop. That said is doubling up your mortgage a need or a want? I mean you don’t NEED to do it to keep the roof over you’re head, but it’s kind of hard to lump it in with pedicures.
March 18, 2013 at 10:32 am
Oh man. My mother-in-law needs to read this. She is on a fixed income and generally claims to not have a lot of money, but she told me last week she is buying all new stainless steel appliances. Five of them. Appliances are a “need” since she is moving into a house that doesn’t have any, but she is spending a fortune on them, and flat out told me when I asked why she was getting stainless steel that she “wants” it because she really likes the look. She has bought used appliances in the past and I get the feeling that she feels like she deserves some new ones now, for some reason. She seemed to think these would be the last she’d ever buy… I quickly shut that notion down since she is only 60. I could only say so much and I’m sure she understood from the tone of my questions that I thought she was being foolish, but it’s really none of my business so I had to let it go. I had to vent to a couple of people before I could let it go though. It makes me furious to see someone that cries poor (legitimately so, I think) waste so much money. Argh.
March 18, 2013 at 10:36 am
I need to do this again. I was really good about a year ago and I’ve just slid since. We’re now starting to save for a down payment on a house, and we’ve confirmed that we’ve been spending a lot of unnecessary money that could be directed towards the down payment fund. I’ve already stuck a notebook in my purse….I’ve got some tracking to do!
March 18, 2013 at 10:37 am
@Elizabeth: You NEED to have your mortgage paid off before you retire and you WANT to do it as quickly as possible. Good for you!
March 18, 2013 at 11:14 am
I know it is going to sound silly, but is vacation a need or a want? I mean, vacation I “saved” money for, not vacation I just put on the credit card.
I fell really bad for taking them, but if I don’t I feel I’m going to burn out…
March 18, 2013 at 11:25 am
I’ve been keeping track of every single penny I spend for over 3 years now. I have an excel file with all my fixed and other expenses and spending with everything divided monthly. It helps me find ways to save money. And this way, it’s hard to justify spending money on a want rather than a need.
March 18, 2013 at 11:32 am
Elizabeth, I’m with you. I WANTto retire early, therefore I NEED to make extra mortgage payments, and extra contributions to my retirement accounts. In order to accomplish those things, I need to spend the bare minimum on everything else. I always smile a little too when someone proposes tracking every cent for x amount of time, or my favourite, do a “No Spend Day/Week”. That’s my normal mode now so it always seems kind of funny. Other than the planned gas and groceries, most weeks there is just nothing else we need to be buying. We take coffee in our travel mugs, pack our lunch, and I don’t forsee us wearing out any clothing between now and Friday and therefore nothing needs to be bought.
We’re all at different places in our finaical journey – 10 years ago I did need to be told to track all my spending to figure out where I was going wrong. We did it and based on the eye-opening results we made major life changes. Now we’ve been living the frugal life so long that unplanned, non-essential spending it’s just a vague memory and anything we gave up wasn’t important to us (or not as important as retiring early).
FYi- I still track every that comes and goes. My spreadsheet goes back to January 2005. When I started tracking I thought it would be a short term project, not something I’d still be doing going into my 9th year. But I found knowledge empowering. Once I could see where every cent wound up, I could make better choices, and set higher goals for us because we could clearly see what was possible. We used to hope we could retire at 65/68, now we know we’ll retire at 57/60. As a new years resolution a friend of mine has started tracking all her spending. Boy what a lot of grumbling! Here’s a piece of time tested advice. Stop spending and you will have nothing to track. When I look back to 2005 on my spreadhsheet, excluding utilities/mortgage etc most weeks had 20+ items listed. Now a normal week has gas and groceries. Updating your spreadsheet takes all of 1 minute when you stop the madness.
March 18, 2013 at 11:58 am
I’m really struggling with wants/needs right now. I’m not *great* with it at the best of times, but we are currently preparing to list our house for sale. We are selling to downsize into a smaller and less expensive home, so that is good. But we are spending a few thousand on repairs, painting, etc. to get it in better shape so that hopefully it will actually sell. We were not debt-free before we started this process so these repairs are going on our LOC. Makes me feel nauseous, but I do feel it will be worth it in the end, and with reduced mortgage payments we should be able to pay the LOC off faster…
March 18, 2013 at 12:01 pm
I NEED a job
I WANT a car!
I need the job to save up for the car!
I am great with saving for needs vs wants….hubby is more of a wants guy…drives me crazy.
March 18, 2013 at 12:06 pm
@Tracey, If your MIL is absolutely going to get the Stainless Steel appliances come hell or high water, perhaps suggest she go for Stainless Steel Front appliances.They are often less expensive and most of our appliances are hidden inside cabinets anyway.
March 18, 2013 at 12:17 pm
This couldn’t have come at a more perfect time. I just finished writing a post about living more frugally and have added links to your debt free forever post. Now I want to ad a link to this article on my blog post. Thanks for all of your great money saving tips. I am a big fan of both of your shows. http://www.lindahadalittlelamb.blogspot.ca/2013/03/how-to-live-more-frugally.html
March 18, 2013 at 12:28 pm
@Gabby – I think we Canadians confuse time off work with vacation. We need time off work – absolutely. We ‘want’ that time off work to be in Mexico or someplace warm.
One can have a week off of work without spending $3k/person to lie on a beach in another country. Take some daytrips, plan some specific home activities like painting or a renovation project. All that will rejunevate one’s mind, without the cost.
March 18, 2013 at 12:40 pm
I did exactly this yesterday when I went looking for my shovel to turn over my compost pile. MISSING! So, rather than buy myself a new shovel, I borrowed one. And I felt that much better about it and the pile got turned over.
March 18, 2013 at 1:39 pm
@Tana and the missing shovel: Maybe someone borrowed your shovel?
.
March 18, 2013 at 2:52 pm
@Gabby, going away is always going to be a want but if you are consumer-debt free and all that and you’ve saved for it there’s no reason to feel guilty! If you’re not debt free, try staying home for your time off for a year or two. You may even find it more relaxing to avoid the hassle of travel. Read a book, go to the park, take a long walk… And in Canada there are usually beautiful scenes to be had somewhere nearby!
March 18, 2013 at 2:53 pm
I think as long as all the needs are met there is nothing wrong with meeting the wants. If you want stainless steel appliances go for it – just shop around and get the best deal possible. If you want to travel the world why not do so. There is so much to see and learn. Sometimes it’s okay to replace a household item for design or style purposes even if it still has life left in it. That’s how places like furniture banks or thift shops manage to function. If you want new clothes this spring go ahead but donate last year’s clothing. Just don’t use credit to obtain your wants.
March 18, 2013 at 3:23 pm
Recently as part of a training course I learned about Abraham Maslow and his theory on man’s hierarchy of needs. If anyone hasn’t heard of this before (I vaguely remembered the basics from high school so I’m sure this is a pretty widely recognized theory) the idea a pyramid where each basic level of need has to be met before a person really concerns themselves with the next level. At the base of course are our physiological needs, followed by safety, then love and companionship, then self-esteem and finally self-actualization. I think a large part of the problem in our society is that we are spoiled… many of us don’t have to worry about the basics so we wind up worrying about things that just really aren’t that important when it comes down to it.
As to needs versus wants, in our society we don’t know what “need” means any more because most of us live too well. We need shelter, but not a large single family home. We need food, but not organic or meat every night of the week. We think we need these things because we grew up with them or see our circle of friends and family with them, but they are simply wants.
March 18, 2013 at 4:08 pm
I am pretty good about holding off on the wants. My hubby is a wants guy all the way. I love getting my hair done and pedicures. I have started to ask for gift cards for these things. It allows me to get my wants without having to dip into my own money and no extra stuff being brought into my home. A win/win situation.
I think the key to this blog is that if you have saved for a want then go ahead but be honest and know what is a want and what is a need.
March 18, 2013 at 4:39 pm
Tracey, does your mother-in-law give in to many wants? Perhaps she has lived all her life being frugal. Perhaps your father-in-law’s wants came before hers. If these appliances are what she wants, and if she has not asked you to pay for them, then so be it. It is her money. I went to Grand Cayman this year and then to Florida. I paid for both trips. Were they wants or needs? Well, I have had four vacations in 70 years, so yep, these were needs. I needed to do something for myself. My children are treating me as I treated my parents, and feel comfortable that I am capable of managing my own money. I have a good pension, and my savings, which grow a little every year, will pay for any serious health care issues.
March 18, 2013 at 5:09 pm
Aimee: I think you’re onto something!
March 18, 2013 at 6:52 pm
Worried about money?
Lose those worries by adding a second paycheck with Strong Future International. Get started FREE. Start seeing money within a few weeks. Learn more at:
http://www.sfi4.com/11405523/FREE
March 18, 2013 at 7:48 pm
@Tracey, your MIL wants stainless steel appliances but does she realize she will need to clean them daily in order to keep fingerprints off? Just went to Costco today to buy bread (2×3) milk (3×3) eggs (2×30) cheese (4) apples (2 bags) oranges (1 box) banans (1 bag) dish detergent (year supply) coffee (4 kids not much sleep) oatmeal, hummus, 1 windshield wiper (takes 1 min to replace) When my three year old saw the cookies he said (and i’m not kidding) “we can make cookies at home”. Would love a new raincoat (have wanted a long one for years as I walk almost everywhere except Costco) will keep checking Sally Anne until I find one, then my daughter will get my old one. We follow a budget and it works! We have yearly, monthly and weekly expenses. I am home and about with kids (3, 9, 11, 14) and it works. We get plenty of great hand me downs from friends and pass them on after. We don’t go out for dinner or go on fancy vacations but my mother taught me how to cook when I was young and we love camping with friends. Just got Internet in the home a few months ago (want) we just didn’t have enough time to go to the library as often this year where if is free (paid for in our property tax, need, so not really free). Gail, you are fantastic, I watch your show whenever I can and my kids often watch it with me. Can’t wait for your new show in April. Wish I could go to your luncheon in Cobourg.
March 18, 2013 at 8:20 pm
@ Gabby: I think “needing” a vacation depends on each individual. Going south for some to get sun really is a need who have SAD. Getting away from your daily life can be a need; it can provide you with new perspective and renew energy. We are traveling on a huge trip because my husband needs a vacation after spending a year with large amounts of responsibility and lots of overtime and living far from home. I “need” this vacation so far away because we are seeing my relatives who are all older and some have already passed on. For me, it would be about living with regret if we didn’t do this trip; for my husband, he needs to spend time away from work and with his family and just “re-group”. We are basically debt free and have a financial plan. To not do this would cause us difficulties in different ways later on. Is a “need” the right way to phrase it? Maybe not, but it’s a priority after our essential needs are met (food, shelter, basic clothing). In most middle class families, I’d say its not so much about defining needs, but establishing priorities and staying focused and deciding what to let go of to obtain/do the things that matter most and represent your values.
March 19, 2013 at 8:32 am
When I look at February’s expenses and do not count savings and obligations, that’s about 20% needs and 80% wants. If I count obligations occured by wants it’s more like 15/85. Good news, it means that I could easily get by with less money.
Anyway, most expensive was car savings (want), music lessons (want!), and getting lamps in the new place (0,2% need, 99,8% want).
Though I find a lot of stuff hard to categorize. If a hot lunch for 4 Euros makes me more productive at work, but I could likely get away with being less productive, or I could achieve the same amount of productive with sweets for 2 Euros, is a hot lunch a need? And what about insurances? Is feeling safer a need or a want?
March 19, 2013 at 12:06 pm
My boyfriend and I usually spend a far bit on our wants even though we are in debt. I do not feel guilty about it at all though since we are aggressively paying it down. Over 10k since January. We are down to our car payments and student loans.
I enjoy my trips, eating out, going to the gym, skiing. Spending that time with friends and the boyfriend. One of the trips is allowing me to see my sister and niece who I have not seen in 4 years.
We do not go into more debt for these wants, just dont pay it down as much. I also work as much overtime as possible to increase our cash flow. We also make choices that allow this like living in a cheaper place, taking a car off the road for the winter.
March 19, 2013 at 3:39 pm
We have a plan to eliminate consumer debt in 3 years. Yet we still have those wants. So instead of being taken in by the commercialism of Valentine’s Day, I cooked dinner using one of Gail’s recipes.
However, for our 13th anniversary we would like to take a break outside the house since sometimes we are exhausted from working hard and running after our toddlers. How to do that on a budget? hmmm
I’ve been off work for a little while and money is tight. Had to cinch our belts then.
We’re cashing in on our reward points now.
We had been saving air miles/aeroplan to take a trip but we could use some fun time in the near future vs the years it would take to save the points and besides, when we are debt free, we can use some of that amount to look for good deals.
With one of the points cards, we got a $50 gas card, with another a $50 gift card for a restaurant and with another drugstore point system, $200 of stuff that we would eventually need for the kids and our personal care (stocked up on a sale day). The diaper points were used to get a new book for the kids. A mix of needs and wants.
The money that we saved from not spending on gas and medicine/personal care was applied to the repairs on our 13 and 15 year old cars. (The car repair budget is spread out over the year but the repairs are needed now so the buffer that we have and the pinching in other areas is covering until we can take it out of future months.)
We also still have movie passes from some promotion that we haven’t used in years. If we’re not too tired, that might be for the anniversary too, not sure sleep might trump fun. I do feel guilty about bringing in foods at the theatre when policy clearly states no outside food. So I try to be full before we watch.
lol when we got the restaurant card my hubby wanted to use it when he wanted a break from cooking and I said no way, that’s reserved for very special occasions.
It’s hard to be disciplined and stick to a budget of needs vs. wants. We suffered from debt fatigue awhile ago and kind of gave in (by not keeping track or not using the info that we logged to set a proper budget). For my family it won’t work to have us grind it out for the years to come. We don’t want to be off budget and spend more than we make. It is SO satisfying to not live off credit and to have buffers for swings in cash flow or for emergencies. But when that satisfaction is not enough, these “freebies” are a great substitute.
March 19, 2013 at 4:06 pm
Really, is vacation a need??? I can’t even believe people would ask that. Yes time off of work to recoup is needed but not a vacation away from home. It is a want no matter how you look at. You can choose to take one but please don’t try to pass it off as a need.
March 19, 2013 at 11:47 pm
Interesting conversation. Whoever said some things are better characterized as priorities has my vote.
You’ll have to pry my cleaning lady from my dead hands. I recently gave her a long overdue raise and now pay $70 every two weeks.
We rarely go out for dinner which could easily cost that much if we did; we prefer my cooking, I prefer her cleaning skills.
We are retired, living on a single pension and debt free. I have had a cleaning lady since I was in my 30s, working and raising our kids. Was it a want or a need? It sure was a priority and always will be.
Now, what I NEED is to stop smoking so I will have even more cash per month. I have tried too many times to recount and obviously have failed, no matter what method. Of that vice, I am truly ashamed.
However, as we age we find our needs and wants have waned and sometimes get blended. A pedicure years ago was a want. Now it is a need to keep my feet healthy.
As for vacations, I advise taking them when you can, just save and prepay them. I take great comfort looking back at the wonderful times we have had on vacation, when the kids were younger and now with them and their families. These are priceless memories.
March 20, 2013 at 4:01 pm
Going to try this 2 week challenge myself and see how it goes. I’m really hoping that how I think I spend actually matches up with how I spend. Thanks for the little challenge Gail.
March 20, 2013 at 11:44 pm
Want vs need is very personal to me. What I NEED is far different than anyone else’s NEED. Same for my WANT. I am all for a vacation and can certainly support someone’s NEED for that. It may not apply to me, but that doesn’t mean it’s not valid to that person.
I will follow my budget and tracking, I will continue with my no-spend day/week, I will do everything in my darn power to make this money-thing work for me, and my circumstances.
But I’ll be the south-end of a northern-headed rat before I’ll let someone else determine my needs. Or wants.
Thank you for letting me make my statement.
March 21, 2013 at 1:02 pm
I used to love going to restaurants but after buying a house, there was no extra money for that. I have learned to cook my favorite meals (with help from chef at Italian restaurant who gave me his recipes when I offered him tomato plants). We have a nice meal once or twice a week with a bottle of wine and we rarely go out anymore.
March 23, 2013 at 11:42 am
[...] Wants vs Needs [...]
March 28, 2013 at 10:23 pm
[...] out Gail Vaz-Oxlade’s blog Making Money Make Sense I stumbled upon a blog post called Wants vs Needs. You may know her from Till Debt Do Us Part. Simply put and blunt, Gail explained that we all [...]