The Easiest AND Hardest Way to Save Lots of Money

by Justin Weinger on January 24, 2007

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, 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. 

Unfortunately, nothing could be further from the truth.  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.  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.  After determining your need you have to make sure that your wants don’t come back into the picture.

In using the above example, you know that you need reliable transportation, meaning you need something that’s going to get you from point A to point B with minimal hassle and low maintenance costs.  With that in mind, does that mean you should get a relatively new used car or go for broke and get that 5 Series BMW you’ve always wanted?

In this situation, you’ve done a good job of determining something 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.  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.

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{ 2 comments }

Brian February 1, 2007 at 5:38 am

The difference between needs and wants is definitely a defining characteristic of a lot of people, myself included. I find that a lot of people simply don’t care about the price of what they buy, no matter what it is. I’ve recently moved to be closer to work, and while it is easier to get there and I have more time, I have less money. It has forced me to truly think about what I buy, when I buy it, and whether I even need it in the first place. Do I need Coke, or Pepsi? I don’t need either! Still, I’d rather have some kind of soda rather than none at all, so I get the store brand cheap stuff (most store brands are suprisingly tasty! Perhaps that would be a good topic for a blog entry for you). I try to get diet even, since that’s what I need to be healthy more than what I want to taste. I don’t need that Starbucks Coffee and a muffin every day (and though while I was commuting two hours each way a few months ago, I didn’t have to go to Starbucks to have a daily snack).

I also don’t need to go out to eat three times a week with my wife. You can just imagine what that racks up to at the end of the month, even when you don’t get appetizers, expensive menu entrees, dessert, or alcoholic drinks. If I tried doing that now I’d be broke in a week.

Jeff October 9, 2009 at 9:38 am

My 3 criteria for Needs vs Wants is:
Is this purchase Necessary? – Basically be honest with yourself – why are you buying it?
Is this purchase Urgent? – Is there a reason I can’t wait until next month to buy this?
Is this purchase the best value for my money I can find? – Quality vs price, sales, cheaper alternatives, etc.

I don’t let my decision making process keep me from blowing money on stupid stuff that’s fun, but at least if I go into a purchase aware that it’s something I want rather than need, it keeps me from making as many want purchases as often. That, and all want purchases MUST be in cash, and can’t be made until ALL of the credit cards are paid off and the bills for the month are paid.

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