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

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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.

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.