Needs vs. Wants
Much of popular culture tells us that we need a lot of stuff: certain brands of clothing, certain types of cosmetics, a certain car, a particular vacuum cleaner, even a special knife for slicing tomatoes available through this television offer. But hurry. Supplies are limited. Have your credit card ready.
An important step along the road to financial security is to redefine needs and wants so that you don’t get confused by infomercials late at night.
It’s actually easy: Needs are things you have to have or you cannot live. You have to have food, you have to have water, you have to have some way of keeping warm through clothing, and you have to have some kind of roof over your head. Everything else is a want and therefore optional.
Sometimes it is helpful to think about how our ancestors lived. The American pioneers grew or hunted most of their own food. Families might live on a combination of beans and potatoes or beans and cornbread every day, three times a day, for weeks and months, particularly during the winter. They got water from streams. They made their own clothing, and those log cabins we think of as so romantic were actually single rooms with a loft for an entire family, including four or five kids. They were generally under 300 square feet. Some were less than 100 square feet. They had what they needed, just barely.
It is okay for us to have things we want. But we have to be honest with ourselves. The things we want are optional and if buying them leads to financial stress, then it’s better to wait.
When we can truly differentiate what we actually need from what we want, we are in a position to make financial decisions that not only give us immediate pleasure but also a long term feeling of confidence. Choosing to buy something you want, knowing that you have the money for it because you recognized it was optional and waited, gives you that short term joy of something new but also the long term joy of knowing that when the bill comes in, you will be relaxed instead of stressed.
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