This article is presented by Kelly Whalen, Consumerism Commentary staff writer.
It’s fairly straightforward to figure out the difference between a need and a want. Needs are basic: food, shelter, clothing, water, warmth. We can also add to that our emotional needs: love, friendship, and care.
Wants seem easy to define. Wants are all the extras, the things that are not necessities. No one “needs” the latest gadget, the most expensive pair of running shoes in the store, or the biggest house on the block.
When it comes to actual purchases though the waters seem to get murky. Is a new pair of shoes a necessity or a want? The answer to this question depends on many factors. You would probably want to know what kind of shoes are being considered, how many pairs of shoes the person already has, whether they’re replacing another pair of shoes, and the answers to a dozen more questions. This evaluation of needs versus wants takes time.
We may go through days without having to make spending decisions, but throughout our lives we make tens of thousands of these decisions. Whether they are small purchases like a pack of gum or large ones such as our homes, we are faced over and over again with the question, “Do I really need this?”
If you are asking that question, you are already practicing smart spending habits. “Do I really need that?,” is only the tip of the iceberg though. We can build on that question to make a checklist that will help keep more money in your pocket.
The situation where this often becomes useful is when you are shopping for something, perhaps groceries or a birthday gift, and you see a widget you have been thinking about buying. You look at the widget in passing or may even stop and pick up the widget off the shelf while you make a decision. Here are the questions you need to ask yourself before you put that widget in your shopping cart.
- Is this widget on my list? If it isn’t, put it down and write it on your list for future purchases. If you aren’t shopping with a list, start! Lists are a great way to keep track of all the things you need and want. If it’s on your list you can continue.
- Do I need this widget? No justifications here. Is it an absolute have-to-have-it item? If you said yes, buy it. If you said no, continue to the next question.
- Can I afford this widget? If you answered no, put the credit card back in your wallet and back slowly away. If you answered yes, continue to the next question.
- Do I want to spend my money on this widget? Are there better things you could be spending your money on? Is there a goal you have in mind? For me the idea of being debt-free is much more appealing than the widget I am considering. You may have a goal in mind such as a new home or a vacation with your family, so while the question might be easy to answer, it will depend on what your individual goals are.
Taking a few moments to evaluate our purchases while making them is crucial to maintaining a healthy balance of spending and saving. Using this checklist will only take a few seconds, but it could be the difference between a decent net worth and a fantastic one.
As a mom, I am faced with purchasing decisions not just for myself but for my family and household as well. Using this checklist has stopped me from overbuying, overspending, and buying things I don’t need.
How do you keep yourself in check when you are spending money? Do you use a checklist or evaluation process?
Published or updated February 25, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.