As the standard of living in the United States continues to grow, so too do our misconceptions about needs versus wants. Depending on how you look at things, this can be a good thing or a bad thing.
For the most part, advances in technology are a good thing. Innovation leads to new products and solutions to some of our greatest problems. Innovation also allows for the cost of items to decrease over time. Just look at any piece of electronics equipment as proof.
Not only is a microwave much cheaper now cost-wise, but it is also smaller. My parents still have the first microwave they ever purchased. It has about the same power as the one I have, yet it is easily twice the size.
Neither myself nor my parents remember how much their microwave cost, but you can bet is was more than what I paid for mine.
On the flip side we have the bad side of innovation. Innovation allows items to be mass produced for less money meaning more people can now afford to have the item in question. While I am not trying to make the point that only certain people deserve to own certain items, I am saying that the lines get easily blurred between needs versus wants.
Needs Versus Wants: A Need Or A Want?
I was reading a survey recently regarding what we as Americans see as needs versus wants. Just so there is no confusion, a need is something you need to survive. Think housing, food and water. Wants on the other hand are things you want to have but don’t necessarily need to have to survive. Think designer jeans or a sports car. Unfortunately, there is a gray area to needs and wants.
While a house is a need, a McMansion is not a need. Just like for many a car is a want, since they could get to work and run their errands using public transportation, walking or riding a bike. But for others, a car is a need.
Taking this a step further, if you live somewhere where a car is a need because there is no public transportation, it doesn’t mean any car is a need. You could easily get by on a used car that is a few years old instead of a brand new loaded SUV.
A recent survey showed just how blurred this line can become. Currently, 33% of people view cable TV as a need and not a want. Close to 50% view a cell phone as a need and not a want.
Over 15 years ago, no one viewed a cell phone as a need. This just shows how our perceptions of things change over time.
How To Decide What Is A Need Versus Want
So with needs and wants being blurred, how do you decide if something truly is a need or if it is simply a want?
Here is a short list of strategies.
- Remember the basic definitions of each. A need is something you need to survive. A want is something you would like to have.
- Keep a list of priorities. What things mean the most to you? Spend your money on these things and avoid spending money on things that don’t add value to your life.
- Ask yourself questions. Before you buy anything, stop and ask yourself if you really need it. Or if there are any less expensive alternatives that you could buy instead.
After reading through this, you might be thinking that you can’t spend your money on anything fun. This is not the case. You just have to learn how to balance everything out.
For example, I am willing to spend more money on certain items of clothing because I like the fit and durability of a certain brand. But for other items of clothing, I buy what will fit my need and not a more expensive alternative.
This goes back to the point above about priorities. Make a list of what matters most to you. Then feel free to spend a little more in these areas. Just make sure you spend less in the other areas. You won’t mind doing this if you have your priorities right.
As a society, we have blurred the lines between needs and wants. This is the main reason why we as a group don’t save money, either for an emergency or for retirement. We are starting to view everything as a need and not a want.
To be financially successful, you need to understand the differences between the two. If you don’t you will simply continue to live in the revolving realm of living paycheck to paycheck and never getting ahead financially.
So before you go out and buy something, take a minute to stop and think if you really need it or just want it. And if you do need it, is there a cheaper alternative that you can buy instead to save some money?