Get Rich Slowly recently posted an article about unnecessary spending and how we will look for items that we don't even need. J.D. tells about how he is going through a Costco coupon book and wants to cut out the coupon for a container of Jelly Bellies and for a stainless steel slow cooker, even though he already owns a slow cooker. J.D.'s desire to "save money" is great, but he, like many other people out there look to save on items that they don't need. Luckily, J.D. had someone there to remind him that he didn't need it and he shouldn't look for things that he doesn't need.
I read Get Rich Slowly on a daily basis and really suggest that people subscribe to it. It is one of the best personal finance blogs out there and has great tips on topics ranging from frugality, voluntary simplicity, investing, savings, and retirement.
Needs vs. Wants
Individual needs and wants will vary for each person depending on their income level and what their values are in life. The fundamental difference between the two is that buying something that you need will bring fulfillment to your life whereas buying something that you want will not.
This is the key difference that is difficult for most people to understand. Not every product out there will make you happy, and you should only buy those that will make you happy. Just because other people out there have iPhones, plasma HDTV's, XBOX 360's, or Wii's, doesn't mean that you need one to be happy. I do not mean to chastise people who have these items, but I am merely using these as examples because they are the items that are currently "hot" and are the "must-have" products.
I personally don't need any of those high-ticket electronic items, but I will pay more than most for a good looking pair of jeans or a jacket that fits right. It is all a matter of personal values and what will make each individual happy. The best way to test if you really need an item or not is to see if have to rationalize making a purchase or feel guilty afterwards. If you do either of these, it is probably a good sign that you don't really need it.
Marketing: How I learned that my life was incomplete without their product
Marketing essentially is telling a consumer what he/she needs to "live properly" in today's society. Sometimes it will target you perfectly and you really DO NEED the item that is being sold to you.
But in many cases (perhaps most), marketing creates unnecessary desire. You might think "Oh, well I didn't know this existed before, but I'm sure I can find a use for it". Marketers have mastered human psychology and know how to tug on those strings to get you to buy those new products that they have. They have to "create demand" for a product and you are being directly targeted with advertisements and the excessive branding.
Sales: Are you really saving money?
30% off, 50% off, 75% off. Those are the numbers that every shopper likes to hear. But are they really great bargains as they sound? Sales can be a great way to get a huge discount on an item that you need. However, if you don't need it and won't use it, it doesn't matter how much you "saved" because you still spent money that you didn't have to.
Even free items can end up costing you money and time. Picking up that free couch on Craigslist might have been a good idea, but it can clutter up your house/life. If you want to dispose of it legally, you will have to pay to get rid of it.
My Thoughts
I have definitely fallen into the same trap and have been tempted by the lure of Diesel jeans, Freitag bags, and countless other things that I think that I need. I have improved at filtering those out and all of the marketing/branding behind it There are a few strategies that I have used to curb my spending habits and make sure that I am only getting things that I need and that will really bring fulfillment in my life:
- Question any purchase that is over my hourly wage.
- This rule is to make sure that big purchases aren't done impulsively and that thought should be put into it. I translate the purchase into "hours of work" to see if it is worth my time. This is a good rule for anyone because it applies for any income level.
- Use the two week rule for any major purchase, especially for clothing.
- If I have already filtered out something that I will buy, it still needs to go through one more process to REALLY make sure that I need it. Whenever I get a new piece of clothing I let it sit in my closet for at least 2 weeks before I decide to take the tags off. By that point I will know whether or not I really do need it or if it was just an impulse purchase.
- Get a second opinion
- Shop with a friend who will give you honest advice about your potential purchases. Sometimes I just need someone there to say "Do you really need that?" and I realize instantly that it is just the marketing getting to me.
I think it is important that readers understand that it is perfectly fine to spend money, even spend a lot of money. We spend many hours each day working to earn the money. We should get enjoyment out of all the purchases we make. Just be careful not to buy something you don't need and especially don't get into debt!
Related Blogs:
Related Links:
Recommended Books:
- Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence
- Joe Dominguez, Vicki Robin
- Affluenza: The All-Consuming Epidemic (Bk Currents)
- John de Graff
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