Your journey towards financial independence is an empowering, yet sometimes challenging one. We can do a lot NOW in order to have a greater impact on our financial future, but it may mean changing some of our current spending habits so that we create the financial means to make our goals happen.
Enter, the good ole battle between Needs and Wants…
One of the biggest things we encourage at 10thousangirl, after becoming clear on what your personal life goals are, is budgeting (AKA creating a Spending Plan). This is becoming aware of how we spend our money, if we actually spend less than we earn and then looking at what we can do with the difference (then we could also implement a few strategies to spend less and save more!).
For example, you may have a longer term goal to owning your own home. One of the smaller steps towards that would be to save for a deposit in a certain time frame. This would probably mean saving more than you currently are through either increasing your income and/or decreasing your spending.
Identifying and understanding needs and wants becomes very important when looking at decreasing your spending.
What are needs? Generally they are the essentials we need to have to survive. These fall into four areas – food, shelter, clothing and love. Some job and other living related expenses may be needs as well such as transportation and electricity. Does this then mean we can justify all the money that we spend on our needs? Unfortunately…no.
In this day and age, we often don’t just need to survive – we also want to thrive. We have a grand scale of options in the areas of food, shelter and clothing to choose from. While we need clothes to keep us protected from the elements, do we need a new dress every other month that costs $200? Most of us have enough clothes in our closet to keep us going for a long time without the need to restock (be honest with yourself!). While we need to have food to keep us going through the day, do we NEED a $7.50 sandwich? Start having a look at how you spend and ask yourself if what you are buying is to satisfy basic needs or ‘luxury’ needs.
What are wants? These are the things that would be nice to have but aren’t essential for our survival such as gadgets to play with, overseas holidays, expensive haircuts and going to the movies. A lot of the Wants we buy we are aware of being wants, but many others of them are habitual parts of our everyday – the lattes, the magazines, the manicures and the expensive gifts for mum – that we have made them seem like necessities. Ask yourself whether you ‘need’ all of these wants all the time? Bringing awareness to these areas may be enough to start creating some changes.
If you can keep in mind the big picture of why (your INSPIRE goal), you can make many adjustments to your current spending. My life at the moment is an experiment into happily simplified living. As I’ve started a new business and am saving for the things that come with it I’ve cut down in a lot of areas and tried to tackle cutting my spending as a fun project. For example, presents for friends and family are now crafted projects. I made calendars for my parents’ Christmas gifts, written thoughtful stories/cards for friends and brought homemade cupcakes instead of storebought conveniences for dinners. I’ve gone on wine-filled (I’ll admit that I may have decanted a cask wine into a bottle for convenience…) picnics instead of restaurant dinners with friends and enjoyed big talk-while-we-walk excursions instead of boozy afternoons in the pub. I’ve bought generic brands over private ones, bought less books and stationary and caught the bus home rather than a taxi at 11pm at night. All these things have added up to make a big difference in my wallet and I’ve realised how unnecessary some of my Wants were.
Yes, I might have missed out on weekends away to wine country and dinner at a ‘Hatted’ restaurant, but I am comfortable with that because I know why I said no and that reason means more to me in the long-run than a couple of days away or a nice meal…
So, how do you bring the idea of Needs and Wants into actually affecting your bottom line?
Every time you go and reach for your wallet ask yourself if what you are planning to purchase is a need or a want. Stick a post-it on your wallet asking you that question as a reminder. Play around with this idea for the next month. You can do anything for a short time. See if it makes a difference in the amount you are spending. If it does perhaps choose to continue this so you move closer to some of your goals faster!
Let us know how it goes!
Arienne is 10thousandgirl’s content manager and has recently started a business – commencing with affordable life coaching – stemming out of her blog Savvy Sassy She (website to come!). She has gotten much more familiar with her Needs and Wants thereby drastically cutting down on her spending so she can bring her business dreams to fruition sooner!
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