Turns out one of the easiest ways (theoretically) to save money may simply come down to you asking yourself one single question:
“Is this something I NEED or just something I WANT?”
If you can ask yourself this question each time you make a purchase,Â you’re going to set yourself up to save a lot of money over time.
A common misperception regarding this question/form of self restraint is that it should only be practiced when you’re purchasing big ticket items – a new video game system, a TV, designer jeans, a car, etc. – and not during your day to day purchases.Â
Unfortunately, nothing could be further from the truth.Â You should be willing to ask yourself on each and every item you purchase whether or not you are fulfilling a need or indulging a want.Â Even though you might see the most one time savings on big ticket items, over time you’re probably going to net the biggest savings by reducing your impulse buying of smaller, every day items.
Here are some examples of both big ticket as well as every day purchases that you might run into:
- Do I need this XBox 360 or do I just want this XBox 360?
- Do I need this new set of golf clubs or do I just want this new set of golf clubs?
- Do I need these name brand jeans or do I just want these name brand jeans?
Anyway, I think you get the point.
Now comes the hard part – you’ve determined that you definitely need something; let’s say you need a new car because your current one is unreliable.Â After determining your need you have to make sure that your wants don’t come back into the picture.
InÂ using the above example, you know thatÂ you need reliable transportation, meaning you need something that’s going to get you from pointÂ A to point B with minimal hassle and low maintenance costs.Â With that in mind, does that mean you should get a relatively new used car or go for broke and get that 5Â Series BMW you’ve always wanted?
In this situation, you’ve done a good job of determining somethingÂ that you need, but are you going to screw it up by letting your wants take over?
Don’t get me wrong, I’m not telling you to stop buying things and that all purchases are bad – or for that matter all “nice” things are bad.Â I’m just advocating that if you live within your means and are willing to put forth some self restraint, you are probably going to find yourself in a much better financial situation than someone who throws caution to the wind and buys whatever they want in that particular moment.