Establishing What's Really a Need

Understanding the difference between a need and a want is really the crux of sorting out your financial difficulties. In an effort to make ourselves feel better about being consumers, we continually elevate wants to the level of needs. But we actually have few needs, at least in the realm of products that you can buy:

  • Shelter
  • Clothing
  • Food and water

Thousands of years ago, this list meant a mud, straw, or wooden hut, along with some animal skins and just enough calories to survive. Today, we have escalated these basic human needs, and they have become so intertwined with wants that we're not sure how to separate them.

Yes, you need shelter, but you do not need a four-bedroom home with a formal dining room, a fireplace in the great room, a three-car garage, a kitchen with cherry cabinets, and a bonus room over the garage. That's a want.

The same is true for clothing. Humans need a way to stay warm and dry, but they do not need ten suits or eight pairs of jeans. Those are wants.

And while everyone needs food and water to survive, that food does not have to come from a five-star restaurant. You also only need enough calories to survive, not enough to add three to five pounds each year, as the average American does.

The desire to own and consume is very strong in Americans, and it enables us to justify nearly any purchase in the name of needs. Don't buy into it. Instead, use WORKSHEET 5-1 to list every need you have (you might want to use a pencil, though, and keep a good eraser handy). Be very specific in your list: Don't just list “house”; instead, write a description of the house you need and the amount it will cost.


Needs Versus Wants

Need (Description)


Consequences of Not Buying










Identifying the Consequences of Not Meeting a Need

After you've listed all your needs, identify what would happen to you if you didn't get each one, asking yourself the following questions:

  • Would you or others around you die?

  • Would you or others suffer physical pain or extreme physical discomfort?

  • Would your health or the health of others suffer in the long term?

  • Do you know for sure that you would lose your job without this item?

If none of these would happen, it isn't a need, it's a want, and you have no business buying it during a spending freeze. Remember this the next time your mind tries to talk your wallet into giving in.

Establishing — and Sticking to — a Shopping List for Your Needs

Before you leave the house and head out to spend money, write out a shopping list of your needs (which are likely to include only groceries and toiletries). Be sure that they're needs, and don't pad the list because you're in the mood to buy. Keep in mind that you are probably feeling deprived, so you may try to satisfy your spending itch by splurging on groceries and toiletries.

Don't justify veering from the list because something is “such a good deal.” Instead, remember that the best possible deal is to spend $0, so even if an item is half price, you can't buy it unless it's on your list.

Before you leave for the store, write down everything you need to get, and also scribble in an estimate of how much each item will cost. Then total the bill.

If it's less than you planned to spend, stop writing out your list and immediately go to the store. If the total is more than you planned to spend, begin crossing items off your list before you go, until you get down to the budgeted amount.

Then, buy only the items on the list. Don't add items to the list and then cross them off while you're standing in the checkout lane. Instead, stick absolutely to your list.

If you see something you're sure you need but it isn't on your list, put it on next week's list when you get home. Today, you can buy only what's on your list. Be vigilant about this process, and you'll never overspend on groceries and toiletries again.

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  3. Freezing Your Spending for the Short Term
  4. Establishing What's Really a Need
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