Part of our journey to financial well-being is the principal of spending less than we earn. And although there is no single road to financial well-being, that one principal is what sets us up to not only begin creating our wealth, but to also keep what wealth we attain. That principal holds true whether we make $10,000 per year or a million dollars per year! While the concept is straightforward, if we’re not following it, we’re living paycheck to paycheck, just barely keeping our heads above water. In order to master the principal of spending less than we earn, we need to understand and realize the distinction between our needs and wants. For many of us, the distinction isn’t always so obvious and when faced with the reality of sacrificing wants for needs, it can also be emotionally painful.
How to Justify Needs Vs Wants
An important distinction to understand is that needs and wants aren’t the same. As you read that sentence, you’re probably saying to yourself…everyone knows that, right!? And while you might know this intellectually, there is a good chance that you’re not being completely honest with yourself regarding the things that you buy, because you have a tendency to justify in your mind the things you want as something you need. The lines can be a little blurry in the area of needs vs. wants when it comes to your spending habits. That’s why it’s so important to get clear and spend some time to seriously consider taking a look at your current lifestyle and what your true needs are in contrast to those things which are convenient wants. Not to say that you shouldn’t spend money on conveniences, but until you get a hold of your finances, some conveniences may need to be temporarily put on the back burner.
Taking this step by being honest with yourself and drawing a clear line will go a long way in saving you money and allowing you to spend less than you earn. Because not all needs and wants are completely black and white for everybody, it’s a process that has to be done by you, for you. Something that can be a want for one person can be a need for another and vice versa. So, there’s no blanket list that covers needs and wants equally for everyone. As a very simplified example, if you earn your living using a computer, then a computer is a requirement for you (a need), but if you only use a computer to play the most recent on-line games for entertainment purposes, then it’s not.
”We need to stop spending money we don’t have.” – Paul Ryan
As you take a close, hard and honest look at the things that you consider to be needs and wants, the choices and decisions may not, and in some cases, will not be easy. Those tough decisions will take having the right attitude, discipline and self-control. It’s going to take an adjustment of how you see things, a sort of paradigm shift. The things you thought were needs and are realized as wants, now have to be put off until you get yourself to the place where you can responsibly spend the money on purchasing those things. You have to remember that this is a temporary place to get yourself on the right track with your finances. As you give yourself some financial breathing room, you’ll be able to enjoy what was once a sacrifice.
By taking the necessary steps toward adjusting your spending habits now, with patience, over time, you will be able to attain the things you want without the constant stress and anxiety of how you’re going to take care of your needs. As the saying goes with regards to physical health, “an ounce of prevention is worth a pound of cure” can also go for your financial health. Making some sacrifices now in the short term will be worth the financial freedom you’ll gain later in the long term! The mental and emotional choices that you’ll have to make between your needs and your wants will be difficult at first, but the reward of bringing your financial health back to life will make it surprisingly easier as you continue on.
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