Wants Vs. Needs – How We Rationalize Spending

Wants versus NeedsThis age old debate is a mental and emotional struggle that everyone deals with.  Some deal with it better than others, but there are some that allow it to completely consume them.  Anyone that is trying to get out of debt must get a grip on this debate and find a common ground.  Wants versus needs will always play a role in our purchasing, but we have to learn how to control them in order to make better decisions.  If you are currently looking into starting a debt reduction plan or are on one, then this is something that is very important to learn. Well, figuring out the difference between the two is important for anyone who wants to use their money wisely.

Emotional buyers are the most likely to fall victim to the wants versus needs paradox.  Trust me, I used to be a very emotional buyer. When I was sad, bored, or angry, I would go purchase something. Emotional buyers tend to only use their current state to rationalize a purchase.  This group of people tend to have higher amounts of debt (I could check that one off a few years ago).  I used to be an emotional buyer.  Now, after a long struggle, I have become more rational in my purchase decisions.  This was not an easy task, but it has already saved me thousands of dollars per year.  I now longer buy with my emotions, but use cognitive reasoning to control my spending.  Here is how I break down wants versus needs.

I Really WANT It

We all want something, whether it be the newest iPhone or a new pair of clothing.  Our emotions can easily get the best of us and before you know it, you have just dropped $500 on something that you don’t need.  In my case, it was $10,000 on a Jetski that I “really wanted!” When consumers put their emotions first in the buying cycle, they will try their best to rationalize their purchase.  Consumers will implant the word “Need” into their rationalization in order to make the purchase more appealing.  This act is how we end up getting deeper into debt, or even sometimes getting into debt in the first place.

If you use place this word into your spending rationale, then try out the “sleep on it” purchase method. I have used this for a past couple of years and it works really well. Basically, you get excited about a purchase, but instead of just going through with it, you stop, drop it, and go back and sleep on it. Try to go for a few days or even a week before you make the purchase. This method works really well for me.

The best way to counteract this predicament is to figure out what your actual needs are.  Here are the basic human needs:

  1. Food
  2. Water
  3. Shelter
  4. Clothing

Now, we can expand these to dive deeper into each category, but these are still the basic needs for survival.  Everything else is typically classified as a want.  Using the word “want” is to help satisfy our emotions and keep our rationale intact.  Our issue as a society breaks down into how well advertising makes us feel that we “need” something, thus parting us from our hard-earned money. Apple does a really good job of this. People love their products and many feel they “need” the next iPhone, no matter if they just purchased one.

Think of wants versus needs in this manner. We all probably need some form of transportation to get around. What we want might be totally different. Yes, I may want the cool BMW to drive around in, but I don’t need it. We need a base model, but we want a luxury model.

If you want to see the wants vs. needs in action, just do some people watching at a mall or a place like that. You will hear people rationalizing their desire to purchase a product. We do this with house purchases as well. My wife and I actually moved into a house that is smaller than our last one. We didn’t need a large house, though we wanted one. Yes, we need shelter, but we want specific amenities. Just listen to a Realtor when they meet you for the first time when buying a home. “What do you need in a house?”  That answer is simple. We need four walls, a floor, a roof, and a door. The rest are wants.

The Best Way to Curb Spending

The only way you can start to curb your spending habits is by differentiating between your wants and needs.  You have to learn how to push out your emotional spender and bring in your rational one.  Taking a rational approach to your purchases and taking care of your needs will put you on the right track toward debt independence.

We never are able to fully curb our emotional spending, so the best way to handle that is to create a budget.  This budget will be dedicated to your emotional purchases, whether it be new electronics, clothing, or eating out.  Once you know how much money you have to spend toward these “wants”, then you can easily put them in better control.  Finding the happy medium between need spending and want spending is one of the best debt reduction tips around. If you don’t believe me, then just ask a reformed emotional spender. I’m one and this is exactly how I got myself under control!

How do you handle your Needs versus Wants?  Let me hear from you below.

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  1. the saver says:

    Easier said than done. I find myself always saying that I need something, but i only really just want it. I think that makes it easier to rationalize the purchase.

    1. That is pretty much the whole point of the article. It is harder than one thinks to differentiate between wants and needs.

  2. Jason @ froogalism.com says:

    You make a very important point here, Grayson. You can also help your children to learn this by distinguishing the difference between wants and needs starting at a very young age.

  3. I keep the two apart by keeping a mental list of the things I actually need. For example I might see some tools on sale that I could use, but I stick to only considering buying the ones I actually need.

  4. LOVE this post! “Emotional buyers are the most likely to fall victim to the wants versus needs paradox.” <– Yes. I am an emotional buyer — or I was one, at least. Now, I try to have a plan before I go into a store, and I try to avoid shopping altogether if I am emotional.

  5. I was totally a spender before, but when I noticed that I was only wasting too much from the things that I don’t really need, so I started to review my expenses. I also told my daughter that we should not keep buying the things which we don’t need.

  6. I have been fighting a losing battle with my language on this subject. I’m trying to retrain myself so that I stop saying “need” when it’s a want.
    Easier said than done though, right?

  7. Mark Brown says:

    Informative post Grayson! As you mention basic Requirement for food ,cloth ,water,Shelter are true but apart this money is also basic requirements for a human being to survive. If person is earning he can buy anything and full fill all basic requirements.if not than person should advice with financial planner for there specific goal .

  8. Jayson @ Monster Piggy Bank says:

    Gray, I have a list of wants and needs. Doing this is one way of my financial strategies. It is really relieving seeing the separation/distinction of the two, which gives realization. It is a bit hard to do for first-timers. But, I hope you try it out and see for yourself.

  9. Sigh, this is such a common problem. After every useless purchase, I say to myself that no more, this was the last one. But then somehow I always get caught up in it again. But you are right: this is a bad habit and if we all could control our wants, we would be saving so much more on a regular basis. Plus it would help pave a smarter way of spending for our kids.

  10. Needs are those factors that are required for you to lead a healthy happy life on a daily basis including good food, shelter and health care. Where as things like DVD players, the latest designer clothing, cigarettes etc. are wants and there is certainly no need to have them in your life. We must differentiate between the two to save more for our future.