I hear people use a phrase in daily conversation that doesn’t quite fit the situation they’re referring to. It’s become so pervasive in our society that most of us wouldn’t be able to separate one from the other. It seems the lines have become so blurred due to our shared notion of what we’re “deserving of” simply because we work hard and assume the daily stresses of life.
I’m talking about the concept of a want vs. a need.
In simple economic terms, they’re defined as follows:
- Wants: things we may desire
- Needs: things that are essential for human survival
Using these as our guideposts, let’s discuss a few basic items that are associated with needs but really should be defined as wants.
I Need a New Car
Define “new.” Is it new to you or are you literally saying you need a new car from a dealer lot? If you’re referring to a brand new car, get ready for some sticker shock. The average new car costs over $48K with a payment of $726 per month!
You don’t need a new car, you want one. This longing for something new will take a major chunk out of your bank account on a monthly basis while saddling you with a depreciating asset. You’d be better off getting a “new to you” used car and save thousands if not tens of thousands of dollars.
I Need a New Dress/Suit
For what exactly? Are you looking to impress your high school classmates at a reunion? Perhaps you’re going on a job interview (although many of these are now done via video call making this notion a bit dated). The point is, do you need the new dress and/or suit or do you want them?
It’s entirely possible you may need these items. Perhaps your closet is a barren wasteland of jeans and t-shirts or threadbare sweaters from the 90s. Regardless, this could actually be a case where a need based decision may apply. Having said that, it doesn’t mean you need a Kate Spade bag as an accessory or a Ralph Lauren suit. Staying within a budget is always in style.
I Need a Vacation
I speak from experience when I say, this can definitely fall into the need category. With the stresses of work, parenting or just life in general, all of us could use a breather every now and then. There’s nothing out of bounds by saying you need a vacation, but this comes with a caveat.
There’s a big difference between saying, “I need a vacation” and “I need to visit Europe.” You may need the downtime but you could easily hop in your car and get that done in a hotel near you. This is especially true for those of us who live in the Carolinas. The myriad of beach and/or mountain getaways is pretty extensive.
Managing your expectations within a stated budget helps to dispel any disappointment you may feel for not getting what you want. A great way to treat yourself without breaking the bank is to stay in a hotel that’s slightly less than the one you envision (an example may be an Omni Hotel vs. The JW Marriott). Both are nice, but you’re not having to pay $500 a night to stay in a room while also spending less on food/drinks while you’re there. Better yet, stay in an Air BnB and make your own drinks/meals.
Using simple economic principles will go a long way toward helping you curtail bad financial choices.
Your choice to wear a leisure suit to your high school reunion? That one’s on you.
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