In times like these, separate the want from the need.

by Paul Michael on 26 September 2008 21 comments

I remember saying to my dad, a long, long time ago, that I really needed a whole bunch of He-Man action figures for Christmas. Oh, and Battlecat, too. My dad looked at me, a hopeful 10-year old with big cow eyes, and said “no, you don’t need them…you want them.” It went over my head. How could he not know I needed them? Now, as an adult living in a country that’s in economic turmoil, his words resonate more than ever.

Everyone has wants and needs. The needs are (or should be) important, the wants, not so much. But it seems a lot of people I talk to find themselves in financial trouble because of their inability to discern the two. For instance, I recently talked to a guy who is suffering big-time because he can’t afford his house payment and his car payment. Now, we all need a house and almost all of us need some kind of transportation, usually a car. But as I dug deeper, I found out that he has a six-bedroom home, and his car is an Escalade.

“Why six-bedrooms?” I asked. “Isn’t that a bit much?”
“No” he said. “I need a den for watching TV, and an office for the computer. Then there’s our bedroom, and our little girl’s room. And we have a room for the pool table and a hobby room for my wife’s sewing and scrap booking. That’s six.”
“Couldn’t a lot of that be put in the basement, or combined?” I said.
“No way” he exclaimed. “Our home gym is in the basement, along with the guest room and the playroom for all of the toys and games.”
“And the Escalade?” I said.
“It’s a good, reliable safe car and it wasn’t that much more expensive than the Yukon.”

I walked away from that conversation scratching my head. “A hobby room? A room to play pool? A home gym? A Cadillac Escalade?” These all seemed like luxuries to me, a guy with a wife and two kids, a small 3-bedroom town home and no basement. When it came down to it, he had convinced himself that wants were needs. No one needs a pool room, they just want one. And who really needs a hobby room for sewing? I mean, if you can genuinely afford it, fair enough. But is it a need? Is it worth the financial stress he's going through?

I hear this all the time. “I just had to get this purse, it was on sale and I needed a new one.” Needed? Was the old one falling to pieces, or were you just bored with it? “I need a new game for my X-Box 360.” Why, what will happen if you don’t get it? Will something blow up? You just want a new game, right?

There are wants, there are needs. And when we’re facing financial meltdown at any second, I think we all have to be responsible for separating our own wants and needs. We all need food. Most of us need milk, eggs, vegetables, meats, juice, you know, groceries. But do we need name-brand milk, or will store-brand do just as well? Do we need name-brand tuna or do we want it? Some people insist on buying only name-brands, but those are more like wants than needs. When you see how much you’ll save on the name-brands, you’ll see the immediate difference of a want and a need.

When you want a new book, do you need to own it? Why not rent it from a library? Then your want hasn’t actually cost you anything. On a larger scale, do you need a huge, expensive car or do you want one for the status it brings you? Is that enormous house a want or a need? If you have 8 kids, it may very well be a need. If it’s just you and your spouse, it’s a want…and one hell of an expensive one. And just because you can find a way to afford it, that doesn’t make it a better choice. Look at what you need.

Here’s are 11 suggestions to get you started on the right path…

1: Avoid the sales UNLESS you have a specific item in mind that you need. Sales have this nasty habit of tempting you by great offers that you can live without. If your microwave blows up and you need a new one, then by all means go shopping for a replacement and get a deal. But, beware of browsing through sales if you have no plan. Temptation is everywhere, and that includes the sales sites online. Avoid them unless you’re looking for something specific.

2: Take a shopping list to the grocery store; buy only what’s on it. We’re all impulse buyers to some extent. We see something we want, although we usually don't need it. That’s because grocery stores have spent a lot of time and money on research into customer buying behavior. They know where to position items on the shelves, which items to put at the checkout and how to tempt kids with the nag factor. Formulate a list, stick to it.

3: Never shop when you’re hungry. You’ll buy more, even if you only stick to your list, because your body is telling you it needs food. But, it doesn't help you make good decisions, and you end up buying what you want right now, rather than what you actually need. Suddenly, you’re upgrading from a small lasagna to a family-sized one. And you’re buying the enormous bag of chips. (They’re just examples, I know most of you are avid healthy eaters.)

4: Buy store-brand wherever you can. This post I wrote during my first days as a Wise Bread writer covers it all. Store-brands are usually just as good as name-brands, you’re just not paying extra for branding and marketing. No-one needs Heinz Ketchup, they just want it. (Although, to be honest, does anyone need ketchup at all? An argument for another time maybe.)

5: Use your library. As I’ve said earlier in this post, and before on Wise Bread , the library is your friend. Don’t go buying books and renting (or buying) DVDs when you can get them for free at your local library. True, you may have to wait a little longer, but here’s where we come back to the title of the post; you don’t need to watch the latest DVD release when it comes out, you just want to.

ARTICLE CONTINUES BELOW

6: Eating out is usually off limits (but not always). There’s really no need to be eating out at Macaroni Grill or Red Lobster every other night. By the time you’ve ordered food and drinks and slammed down a 20% tip, you’re seriously out of pocket. No-one needs to eat out, most people just want to after a hard week at work. And who can blame them? But, when you’re watching your money, it’s a luxury. There are a few exceptions though; for instance, right now you can get a very nice small salad with dressing, baked potato with sour cream and pot of chili from Wendy’s all for around $4. Not amazingly healthy compared to home-made, but it’s cheap and much better for you than a greasy burger from BK or McDonalds.

7: There’s no shame in buying second-hand. None at all. A good friend of mine gets all of his t-shirts from Goodwill, and he has some great ones. Most cost him $2-$3 each. Fashion has to be one of the most obvious “wants” around. No-one needs a Gucci watch or CK jeans, they just want them. And I use Craigslist for everything from clothing to furniture.

8: Shop the outlet stores. There are some stellar deals on clothing, furniture, bedding and shoes. Usually, this is because they’re factory seconds or last season’s fashions. Personally, I couldn’t give two hoots about an almost invisible mark on the bottom left of a shirt, but it cannot be sold like that in regular retail stores. The same goes for bedding and shoes. The second you get them home, your kids will scuff their shoes or the dog will scratch the delicate fabric of the bedspread anyway.

9: Stop making unnecessary trips. You drive one direction for something, drive in the opposite direction for something else, and end up going back and forth or all over town, wasting a bunch of that precious gasoline. We all do it because we don’t want to spend the time figuring out a route…but that’s something we need to do. Work out beforehand where you need to go, and the best way to get to every place. Cutting out those redundant trips will soon start adding up to more gas in your tank.

10: Bring lunch to work. It’s something I have a hard time doing because I’ll often eat in my workplace cafeteria or pop out with friends for a sandwich or slice of pizza, but I don’t need to…I want to. Bringing lunch is a good habit to get into. Whether it’s last night’s leftovers or a few homemade sandwiches, the savings you’ll make from week to week will surprise you.

11: Pay your bills on time. You don’t need to be throwing away good money on late fees and rate hikes because you want to watch a TV show rather than get the finances sorted out. If you have online banking, consider automatic payments (they also save you the price of a stamp). If you prefer the old-fashioned method, fill out the payment slip and write the check as soon as you get the bill. You don’t have to mail it right away, but write a date on the back prompting you when to post it. Then, leave it in a place you will see it daily (for us, outgoing mail goes on top of the piano next to the garage door…we see it every day). Remember, out of sight is out of mind.

This is not advice for everyone, I know. Some people will write and say “I’m not living a paupers life just to save a few bucks.” But think about the tough times ahead and ask yourself, is it really worth it if later on you’ll be struggling to pay for it, or something else?

That guy I mentioned with the huge house and fancy car thought he could afford them all. He could, a few years ago. Then his adjustable rate started rising, and his home priced dropped; over $65,000 in just 5 years. He’d put minimal money down, certainly not 20%, and he fell victim to the tantalizing interest-only loans and low starter rates. Now, he’s in over his head. And the government won’t be bailing him out (although at the time this article is published, who knows what will happen to any bailout).

As many people have said, this is just something we have to ride out. Until we’re in clearer waters, following even a little of this advice may help you come out on the other side relatively unscathed. And if anyone has a tip to add to the list, please leave your suggestions in the comments. Good luck to us all.

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Guest's picture
katy

Thank you so much; this is your best post yet.

I do think ketchup is a necessity (!)heinz, yes. And Hellmans mayo. Everything else can be generic.

Guest's picture
Guest

Paul,

You sound like my dad...totally old school, and I say that as a compliment

Paul Michael's picture

You know, I'm often told I act like an old man when it comes to money. It's good to know that's also a positive!

Guest's picture
Kellye

As someone who regularly puts ketchup in everything from soup to scrambled eggs, it's definitely a necessity in my house. But brand-name? In a taste test I honestly wouldn't be able to tell the difference. After leaving college and fending for myself (rent-wise) I have quickly learned the value of store brand items.

Just don't get the manager's special chicken! I was sick as a dog on Wednesday....anything with the potential to give you food poisoning is NOT something to skimp on. That's the lesson I've learned this week.

Great post. Good thing for people to remember in times of economic crisis. Living within your means isn't miserly, it's just common sense (which used to be a virtue). And it's something a lot of people seem to be lacking lately, giving the number of mortgages people are defaulting on for buying houses that they couldn't afford to begin with....

Guest's picture
Guest

Basic needs: food, clothing, shelter, utilities, transportation, communication... and paying your bills.
So when you buy that flatscreen tv on "90 days same as cash" and have to pay it off, that payment just became a NEED!
Congratulations, you just turned a fancy TV into a genuine need by agreeing to make payments on it. Wants become needs very quickly when financed by debt.

Guest's picture
Julia

Great advice and good for thinking. I have a friend who is behind on mortgage payments. When I suggested cutting the cellphone, the internet and the cable, the response was that they were necessities. Our parents grew up without all of that and lived just fine lives. I don't understand why it's now a need just because it's so prevalent. Sure having some type of internet email address and access may be considered necessary in this day, but in that case, the library, ones workplace or a friend's house to check email would work just fine.

I love having a smaller house. Less to heat, less to cool, less to furnish and decorate, and fewer things to maintain! Yet compared to a generation or two ago, or in other parts of the world this would be considered a luxury!

Guest's picture
Guest

Great post, can you talk to my adult kids about this? They won't listen me :(

Guest's picture
Dani

Good post. Unfortunately, though, it seems lately some of the generic and store brand named items cost almost as much as the brand name items.

Guest's picture

Great points from not only the financial but also the health perspective. Even the salads in restaurants can not compete home made food. Especially those who wants to lose weight, this is an excellent way to control the calorie in.

www.nodietneeded.net

Guest's picture
Guest

Thanks for the reinforcement. We've been doing these things for years out of necessity and they DO work. Keep on writing.

Guest's picture

That is so true about shopping when there is a sale. I find that I buy more stuff because there is a "good sale" even though I did not NEED the item before walking into the store or browsing the online coupon sites.

Guest's picture

I know I can get carried away by the sight of a 50% off pair of fuschia slingbacks as much as the next girl (well who wouldn't) but this kind of good ole fashioned sense is what keeps my bank account in the positive..
Gotta be Heinz ketchup though the others were bleeeugh!
Loved this article so much I bookmarked it & will link to it in my blogg (if that's OK) :)
Nic x

Guest's picture
dannatx

I keep telling myself I need a new pair of brown boots. Actually, I don't. I have a very nice pair of brown shoes I can wear to work. I just WANT brown boots.

Guest's picture
Guest

Something I thought about when reading the post & again when reading what dannatx said about the brown boots . . .

When I was a starving English major with big loans to pay off and a low-wage starter job, I learned to shop by function: I was coveting a down comforter because I was cold in bed at night & knew I couldn't swing the $80 cost on a budget where I was lucky to have $30 month to spend on anything other than the basic basics. I came across a garage sale where a woman in her 70s or 80s was selling off some worn comforters that she had made decades ago -- with wool batting, no less! For $3, I filled what had been looking to me like an $80 need. That kind of serendipity (or grace, depending upon your perspective) has been there for me again & again & again.

So, I say it's fine to be inspired by the pair of glorious brown boots that you spotted somewhere -- just think about what it is that you like about them & watch for serendipity -- if you can detach from the "it's gotta be . . ." you may find yourself with something you truly love that did not cost you a bundle.

Guest's picture
Lacey

This was a great post! There is so much turbulence in the market today, and people need peace of mind more than ever. The cost of living has sky rocketed, and I think its important to distinguish want from need! I wanted to offer your readers a link to another blogger who is doing great work. He writes about our 'childhood money messages' and how the best approach to stability in today's market is to resist letting these emotions control our buying/selling habits. It is really fascinating work, and something you should all check out. His name is Spencer Sherman, and you can view his blog at http://www.curemoneymadness.com/blog.

Guest's picture
Sabri

Great Post! Just a comment, We should always separate Wants from Needs and should not wait for "These Times" to do this ...

Guest's picture
Jimmy DaGeek

When my kids were growing up, there came the inevitable buy me this and buy me that. I taught them there are 5 things that we NEED to buy for our modern existence - food, clothing, shelter, transportation and medical care. I also taught them to try to define the use of a want and identify a cheaper substitute. Once you boil things down to that, you can start differentiating needs from wants.

Most people live unconsciously and buy what they want without thinking whether they need it or not. Otherwise, why would most people carry credit card debt? This mortgages their future and puts them at the mercy of credit card companies who know most people can't or won't move their debt to another card.

Guest's picture
C. Sykes

Back in the early 1900's, Sears Roebuck & Co. used to offer kit homes that you could order delivered. I've seen a book filled with their house plans...most of them sized for a "middle class" family were around 800 square feet.

Now, people think that 2,500 feet is too "cramped" for a family of four.

"Wise Bread" is right. No one "needs" a hobby room, a pool room, a play room and a home gym. If you can afford them, fine, but people who don't keep in mind that house prices can fall, well-paying jobs can disappear, credit card rates can jump, and those who are spending all they earn are walking a tightrope...without a safety net...and are very vulnerable to crashing. Better to have a modest home you can afford to keep than a huge home you lose to foreclosure.

Cathy Sykes
moneytospare.net

Guest's picture

We should be aware of what we want vs. what we need ALL the time. If we could save money today by managing our wants then, when market turbulence comes, we do not have to worry too much

Guest's picture
Guest

Great post! However, I have to disagree on the tuna thing. Name brand can make a big difference and with the right coupons and sales can sometimes be a better deal. Some things like pasta or tomato sauce all taste the same, but I find the 5 cents more for a good brand like chicken of the sea or starkist is more than worth it. There's more tuna, less water, and it's less dry (I think it's fresher).

Guest's picture
Guest

Hi, I'm from England. Totally agree with your article. As well as doing everthing you say I also believe in never borrowing money (apart from a mortgage for a necessary home). Save up for anything you need. I have always saved at least 10% of my income, which means that if I NEED to buy something the money's there. When people tell me they HAVE to spend their total income and couldn't possibly save anything I tell them that everybody is inclined to spend what they have earned. BUT, you soon get used to your income being 90% of what it actually is and spend that. Set up a Standing Order (don't know what you call it in the USA) for your savings and you don't even miss the money! Before you know it you have a nice little nest egg, because somebody is actually paying YOU interest on your money! Kind regards from Carroll