Personal Finance - Want Versus Need
Posted on April 17, 2007 10:56 AM
Anybody who has given thought to personal finance probably knows the difference between want and need. Applying that knowledge consistently is where most people have a problem. I don't want to beat a dead horse here, but let me give a few examples to illustrate the difference between want and need.You may say something like, "We need to buy some groceries, so that we have food to make meals." Most of the time a statement like that is going to be true, unless you just went shopping recently for groceries. You may say something like, "We need to go out to a restaurant for dinner tonight." Most of the the time a statement like that is going to be false, unless you are having your house fumigated or something. What you really meant to say was, "I want to go out to a restaurant for dinner tonight, because I don't feel like cooking." There is nothing wrong with wanting to give yourself a treat by dining out. My point is that you should be honest with yourself and admit that this is not something you NEED, but instead it is something you WANT.
Once you can be honest with yourself about your wants and your needs, you can then make better decisions with regard to personal finance. If you cannot be honest with yourself, you will find yourself making poor financial decisions, that you will regret. This is because of another difference between a want and a need. If you really need something, then by definition you should have that something, if at all possible. In the case of food for meals, if you need food, you must buy it using whatever means you have available. If you do not have the cash, then you may end up using a credit card, or the savings fund that you have for a down payment on a house. You would like to not have to do that, but you NEED food, so you MUST. On the other hand, if the item is only something you WANT, then you can do without it for the time being. If you really want it, then you should not have a problem planning your budget accordingly so that you can get it eventually.
In the past, I have made some poor financial decisions, many times because I was able to talk myself into buying something that I wanted, by convincing myself that it was something that I needed. The good news is, now that I am honest with myself about what I want and what I need, it doesn't take me long to realize that, while I would really like to have 4GB of RAM for my desktop, or a dual 21" LCD screen setup, I don't need that right now. I should start saving my money for those things, if I really want them.
Be careful not to over-analyze your wants and needs. Most things, if analyzed to the nth degree, can be categorized as a want. However, in a realistic world, you need to have clothes that you feel comfortable wearing, and to avoid hardship you will most likely need a reliable car unless you are lucky enough to live someplace that does not require one.
"I don't have the money"
You may find yourself saying, "I don't have the money for that right now." Often you will not have the money to buy the things you want. Most people don't always have the money to buy all the things that they want, even the richest people that you can think of. The problem with thinking about your lack of money is that it will probably make you unhappy. Instead of saying "I don't have the money to buy that right now." I like to say something like, "I don't need that right now." When I tell myself that I don't have the money to buy something, it can make me feel inadequate, and it makes me think, "How can I get more money?" When I admit that I don't really need some new expensive gadget, and that I should stick to my financial plan, I don't feel like I've failed, quite the opposite, I feel like I am succeeding because I am following my plan.
As you read this, please realize that it is written from a certain perspective. I do understand that, for some people, even when they are being absolutely honest with themselves, they still do not have the resources to pay for their basic needs. Add/View Comments (1) Tags: Personal Finance
