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Re-Evaluating Needs & Wants

7 October 2009 No Comment

Two things I talk about frequently on this blog are the extreme importance of controlling spending as well as the new age of frugality that I believe has begun over the last year or so.  This unique, historic recession has finally put an end to the insane consumption of the general public.  The savings rate is starting to rise again (which is a good thing) despite the government’s attempts to get you to part with your cash on everything from cars to houses to appliances.

One major cause of the rise of debt-financed consumption over the years has been the improper balance between needs and wants.  Especially when it comes to many members of generation Y, we have grown up with the attitude that if we want something, we need it.  A few examples… we need clothes, so we buy $200 jeans.  We need food, so we eat expensive sushi every week.

A big part of my financial journey over the last year has been to re-evaluate needs and wants.  This is a crucial step in getting out of debt, establishing a good budget, building up savings and simply a healthy financial life.  Put simply, there was many things that I was buying that I thought I needed when in reality, I just wanted them.

Now, with a drop in income for myself (or losing a job for many others), a re-evaluation has been forced upon us.  While it can be frustrating, it’s important to embrace this and not fight it.  I believe that overall, this is a good thing for the public that was drunk on spending.

I encourage you to take a look at your spending patterns.  Do you buy expensive name brand items yet struggle to pay your bills?  You may need to re-evaluate your needs and wants.  Or maybe you spend a ton of money each money on going out to expensive lunches each day.

A few areas that I’ve re-evaluated and made changes as a result:

  • Clothes: I recently purchased a cheap discounted pair of jeans from Gap rather than expensive name brand jeans
  • Food: We’ve cut going out to lunch and dinner dramatically saving hundreds of dollars per month

What have you changed when it comes to your needs and wants?  How much money have you saved as a result?  What made you re-examine your spending?

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