Needs and Wants

Sealy

I've always lived quite a comfortable life yet dont earn very much. One of the biggest lessons in many wealth books is living within your means. One of the most useful lessons to learn is the separation and identification between needs and wants.

Fact 1 - Everybody wants to buy stuff, most of which we dont need.
Fact 2 - You need to buy stuff to live.

With these 2 hard facts in mind, I've devised a method of saving in which I challenge every single purchase I make and categorise them into Needs and Wants.

Needs - Things that are essential for your survival. ie. food, petrol, rent, insurance.
Wants - Things that you would like but arent essential. ie. new computer, new car, gym membership, bottle of wine, cigaretts.

To satisfy my own personal sanity, occasionally I have to purchase some things that I WANT but do not NEED. If you do this, then make sure you are careful and think things through. Ask yourself whether with each purchase, you really really want it.

You can use this method for most things in your life. I use it to justify new purchases in any and everything. Ultimately the core idea of using this practise is to get you to think about your purchases, before long it'll become second nature and you'll start saving huge amounts of money without conciously having to make sacrifices.

Post your methods below, and hopefully we can create a really useful sticky post!
(thank me if you found this useful)

Sealy

masterkay

Interesting post. I'm not sure it needs to be a sticky.

I justify everything I buy that is non-essential. I consider do I really need it and if it is worth X amount. If I do decide to buy something I give myself a cooling off period to think about it and after that if I still want it I will buy it.

Also your needs and wants may be different to everyone else. Someone may need a car but to someone else it is a luxury that they can live without. It is all personal.

On another note. I know it is nice to get thanks but I believe you should post on here regardless of thanks and I know I would post even if no one thanked me. In my opinion asking for thanks or reminding people to thank you is bad form and I maintain thanks are nice but not a necessity. It's similar to what this thread is about. You don't need thanks but you want them

moanymoany

Sealy, what you say is the essence of living a life free from the worry of the postman.

I see so many people who post on here - tens of thousands of pounds in debt - whe reject so much of the excellent advice given to them because they cannot tell the difference between what they need and what they want.

...but we only have ONE takeaway a week....

...but I only go out ONCE a week with my friends....

...but I/we NEED a nice holiday.....

And on.....and on.....and on.... :rolleyes:

In the end I stop reading these threads because I know it will only be the credit crunch and the credit card and loan people saying NO MORE!!!
that will have any effect on them. Otherwise they will always live beyond their means and be in debt - and we all know the excuses they use.

That's not to say I don't admire those who really try their hardest and get themselves out of debt. That takes courage and determination.

Me, I budget for what I want and if the cash isn't there I go without. I may not be surrounded by fab furniture, have expensive holidays, wear lovely clothes, have two super cars, eat meals out and takeaways - BUT - I don't fear the postman and I know I owe no-one a penny.