As we approach the end of the year, we find ourselves in a situation where the environment will force us to spend even though we might not be big spenders. Although spending is part of life and we can argue that what’s the point of earning if we can’t spend, it is necessary to be careful and mindful when spending. With Black Friday just a few days away and year-end holidays around the corner, this week we will be discussing a few tips and advices regarding spending.
1. Understanding the Difference Between a ‘Need’ and a ‘Want’.
Differentiating between wants and needs can be difficult for many people, and if you can’t tell the difference, it may hold you back and prevent you from learning how to save money and live a financially sound life.
Simply put, a need is that which you cannot do without or its absence will make life difficult. A want is that which its absence will not a make a major difference in your life.
Some items are needs, but many of the things we buy are actually wants. And, confusing wants with needs may be causing you a lot of financial stress.
To quickly determine the difference between a want and need, think of a need being something required for survival. Needs are water for drinking, food to eat, clothing to keep you warm, and shelter to live in. On the other hand, a want is everything else. Wants are there to make life a little more enjoyable. And, we should all be enjoying our lives.
It is normal to want things, and it’s not a bad thing.
You may want to take a trip around the world, get the latest iPhone, or take advantage of Black Friday deals and so on. Whatever you want, though, be realistic and first figure out if you can afford it. If you can’t afford it, then stop before going any further. Prioritize your needs first. Once your needs are taken care off then perhaps consider your wants.
Here is how you can lower your spending by telling the difference between wants and needs.
Don’t let your needs turn into wants.
One of the problems in understanding wants and needs is realizing that sometimes our needs can cause us to spend more than we should, meaning needs can turn into wants. Here are some example of basic needs turning into wants:
- Water – To stay hydrated, all you need is water. However, this need can turn into a want with things like bottled water, soda, coffee, etc.
- Food – Food can come in many forms, and the healthier the better. But, going out to eat all the time on a December holiday turns this need into a want and can cause you to spend more than necessary.
- Shelter – In the context of a holiday, lets understand this to be accommodation. Of course accommodation is needed on a holiday but if we insist of getting a sea view hotel that will cost in the region of R30 000 for the week, that cannot be called a need and now it has become a want.
- Clothing/furniture – These are also basic needs but if we already have it, and are waiting for Black Friday to buy it because it is on special, then we cannot justify the purchase by saying that it is a need.
Think before we buy.
Before we buy something, we should stop and think about whether the item is a want or a need. We should ask ourselves questions such as:
- Do I need this to survive?
- Why do I need or want this item?
- Do I already have something similar?
By first asking ourselves these questions, we’ll waste less money and even prevent clutter from taking over our lives.