How to Save More and Spend Less: Needs vs. Wants Explained

checklistThese top ten lists are everywhere but are most annoying to me when it comes to managing your finances. Whether it’s the top ten ways to save more, spend less or trim your budget these lists all have a common theme: the importance of tracking your expenses.

We only have eight here “8 Sensible Living Tips for 2024”

Typically you’ll be given advice about cancelling unused subscriptions, getting a better deal on car insurance, buying items on sale, cutting back on restaurants by packing a lunch and brewing you own coffee to avoid those high priced lattes.

What are Needs?

needs vs wants
When it comes to managing your money you must satisfy certain needs and the basic needs for everyone are obvious: accommodation, food, utilities, and clothing. Beyond satisfying our basic needs we move into the grey area of wants.

Unfortunately this is where most people get into financial trouble because it’s human nature to justify a want as a need. So what does this look like?

Wants Disguised as Needs!

  • You need accommodation
  • but want the biggest mortgage you qualify for and end up with more home than you can afford. What’s the Financial Impact of Hitting the Mortgage Trigger Point?

  • You need transportation
  • but want a high priced luxury car with all the bells and whistles.

  • You need to eat
  • but want the convenience of restaurant meals delivered to your door. Few people track this large monthly expense.

  • You need to save for emergencies and retirement
  • but want to live for today.

  • You need to practice restraint
  • but want the luxury that comes from easy credit.

When we honestly ask ourselves how can I save more, spend less and reduce waste the question always comes down to reducing wants.

If I were asked to create a list of ways to save more money it would only have one item. The easiest way to save money is to not spend it in the first place! Obviously that’s not entirely possible but it forces you to think before you spend.

So step one

is it a need or a want?

Step two

am I getting value for the money spent?

So if that makes you a grinch, penny pincher or a scrooge, so be it. I’ve been called worse but I insist on the following money rules. For needs I demand the best value for the expenditure which means all the advice from those top ten lists: comparison shopping, coupons, sales, etc. And for the few times I choose to satisfy a want I also demand getting the best value for each dollar spent.

Most people who get into financial difficulty fail to ask the most basic question about money – am I spending for my needs or am I satisfying my wants? That question must be the top item to every list on saving more, spending less and reducing unnecessary costs.

Water BarrelThe BalanceIn my E-books (“Water Barrel” and “The Balance”) I discuss simple methods to live sensibly for today, take charge of your financial affairs, and invest safely for the long term. For more information please visit David Penna Amazon.

As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences.

Please share your thoughts in the comment section below.

Leave a comment