Needs vs. Wants – How to Save More Money & Avoid Buyer’s Remorse

by Justin Weinger on July 25, 2011

Creating and sticking to a budget can be a pretty difficult thing to do. However, I’ve found that asking yourself one simple question before you make any purchase can drastically increase the odds you’ll stick to your budget, cut back on impulse purchase and save yourself from buyer’s remorse:

“Am I about to buy something I need, or just something I want?”

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"Stop buying things to impress people you don't even know." - Suze Orman

By going through this quick needs vs. wants analysis with each purchase – and when I say each purchase, I really do mean each purchase – you’ll become a smarter consumer, and ultimately save a lot of money.

A frequent misperception regarding this analysis is that you should only use it when you’re making a big purchase, and not necessarily during when buying inexpensive items. Unfortunately, this thinking will have you blowing through your budget in no time.

You should ask yourself with each item you purchase whether you are fulfilling a need or indulging a want.

I know it seems tedious (and at first it will be), but while you’ll see large one-time savings on big ticket items, over time you will net the biggest savings by reducing impulse purchases of smaller, everyday items.

Here are some examples of both big ticket as well as every day purchases that you might run into:

  • Do I need this PS3 or do I just want this PS3?
  • Do I need these name brand sunglasses or do I just want these name brand sunglasses?
  • Do I need this cappuccino from Starbucks or do I just want this cappuccino from Starbucks?
  • Do I need to take the car to the carwash or do I just want to take the car to the carwash?

I think you get the point and could probably do a good job of running through a simple needs vs. wants analysis in your head.

Now comes an extra layer of complexity – after you’ve determined that you definitely need something you have to make sure that your wants don’t come back into the picture cloud your decision making.

For example, your car has died and needs repairs that will cost more than the car is worth. You know you need to purchase a newer car because you need reliable transportation. So, does that mean you should get a relatively new used car or go for broke and get that brand new S-Class Mercedes you’ve had your eye on?

In this situation, you’ve done a good job of determining that you need something, but are you going to undo that good work up by letting your wants take over?

I know I’m making it seem like indulging yourself is a terrible thing. It’s not. It’s good to reward yourself from time to time and go ahead and buy something you want. The point I’m trying to illustrate is you can’t let your wants rule your decision making.

However, if you live within your means and practice some self restraint, you’ll probably find yourself in a much better financial situation than someone who throws caution to the wind and buys whatever they want whenever they please.

What are your thoughts?  Leave your comments below and, as always, help out others by sharing this post via the social bookmarking buttons – especially Facebook and Twitter!

 

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