What Do You Really Need?
Learn How to Live Better on Less Money
Wanting and needing are two very different things. Learn to recognize and separate what you want from what you need is the best thing you can do for yur financial health. Evaluate your lifestyle and your expectations. Determine what you really need and think about what you can do without. This allows you to live on less money. Living better for less is possible once you learn what really matters to you. Before you buy something, ask yourself; "how many hours of labor will I have to work to pay for this item?" It will make you stop and think and help you avoid impulse spending.
Most of us have too much stuff. There are certain things that we all need: a place to live, food to eat, clothes, transportation and shoes to wear. You may also need things such as medicine, glasses or contacts. Some things are just necessary to have a reasonably comfortable lifestyle.
The Bare necessities
These can't-be-avoided expenditures are guaranteed to take your money:
> Taxes - Federal, state and local taxes, social security contributions are all necessary expenditures. Nobody likes them, but everybody must pay them.
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Shelter - You have to have a place to live. If you won instead of rent, you'll have to pay property taxes and the cost of keeping the home in good repair, in addition to your mortgage.
> Utilities - Gas, electricity, oil, water, trash pickup and phone all are costs associated with renting or owning a home or apartment. You can control them, but you can't escape them.
> Food - You have to eat. There are lots of ways to save on food costs, such as cooking for yourself instead of buying prepared foods or going out to eat. Food is another controllable but necessary expenditure.
> Transportation - Everybody needs to get from place to place. If you own a car, you'll have to pay for gas, insurance and maintenance as well as for the vehicle itself. If you don't own a car, you'll still have to pay for public transportation.
> Debt - If you owe, you have to pay. College loans, car payments, and credit card payments can eat a big whole in your paycheck. Much of this debt can be eliminated by not buying on credit.
> Healthcare - Insurance payments or copayments, medicine, doctor visits, dental care, vision care and other medical costs are necessities. Hopefully these costs are minimal.
> Education - Repayment of educational loans are a big drain on your finances. Work to eliminate these loans as soon as possible.
> Clothing - This is one of the biggest areas for overspending. We need clothes, but we don't have to have expensive designer clothes. Keep clothing costs reasonable.
> Insurance - Insurance is an important expenditure. You need to insure your home, auto, yourself (if you have a family or high debt that will need to be paid off) and if you can afford it disability and long-term care insurance are important to have.
The above pretty much covers basic necessities that will cost you money, except for regular contributions to a savings account, retirement fund or other accounts to assure your financial future. This is the most overlooked, neglected financial necessity there is.
Things We Want But Could Live Without
Here are a list of things that are often thought of as necessities, but might not be:
~ Household furnishings - Nobody wants to live in an empty house or apartment. Some furnishings are needed. But expensive artwork decorative rugs and the solid cherry entertainment center that houses the big-screen TV are not essential to your existence.
~ Cable TV - Many people claim they couldn't live without TV, but do they have to have premium channels? Cable TV is expensive, and the extras can send your bill through the roof.
~ Restaurants - Food is necessary, but eating in restaurants is not. Although it's nice to enjoy a restaurant meal, you can spend a lot of money on drinks and expensive meals. Make this a treat instead of an everyday expenditure.
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Cars - If you need a car to get back and forth to work, it's a necessity. But there are many cars to choose from, and some cost a whole lot more than others. Choose sensibly. You don't have to buy a BMW.
~ Entertainment - You need leisure time and fun activities in your life. The problem is, leisure can be very expensive. You don't need the fancy cruise to the Caribbean - that is a want not a need.
Make a list of your needs and make another list of your wants. After you have a clear picture of what you have and what you need, you'll be able to strike a balance between the two. Don't confuse wants with needs. If it gets to the point where you can't finance your needs, you will have to make some lifestyle changes.
