Is there any question that there are things that we all need to survive? We need clothes, shoes, food, a place to live and some sort of transportation.
Then there are the things we want. These things aren’t necessary for our survival. Never the less, we want things like designer-label clothing, dinners out and a brand-new car.
The reason most people are in debt
and are not saving for the future (retirement, education funds, etc.) is sometimes we get our wants mixed up with needs.
Example 1: We all need clothes that are warm in the winter and cool in the summer. These clothes need to be of good quality so they’ll last a while, and they must fit us. However, we may want the newest trendy jeans, expensive running shoes or a new outfit that must be dry-cleaned after each wearing.
Example 2: Most of us need a vehicle to get us back and forth to work, but we want the newest four-wheel-drive truck or latest sports car.
The problem is that many of us have never learned to distinguish between our wants and our needs. We spend a lot of money on wants — things that we don't really need. Here's a quick way to determine whether something is a want or a need:
- It's probably a want if: it’s possible to delay the purchase, substitute a less-expensive item or use something you already have or own.
- It's likely a need if: you’re purchasing something you need to survive.
Learning to distinguish between your wants and needs will put you in control of your financial situation. It also helps you to:
Learn to spend like a millionaire
- Set spending priorities
- Make wise choices about spending
- Get the most value for your money
- Be a thoughtful consumer
- Keep from getting into debt
- Save money
The best-selling book, "The Millionaire Next Door,” revealed what most of us have suspected: “The key to wealth is living below your means.”
According to authors Thomas Stanley and William Danko, most millionaires buy their suits off-the-rack; drive Fords and shop at Sears. It surprises most people that they have it all wrong about how someone becomes wealthy in America.
As you read “The Millionaire Next Door,” you’ll find millionaires rarely use inheritance, advanced degrees or even intelligence to build their fortunes. In most cases it is the result of hard work, diligent savings
and living below your means.
Most of America's truly wealthy do not live in Beverly Hills or on Park Avenue — they live right next door. “Eighty percent of America’s millionaires are first-generation rich.”
Food for thought
Some people are too proud to negotiate down to a final price or use coupons to save money. But you'd be surprised to know that it is usually the wealthy people who negotiate prices the most. This would explain why they're so wealthy; they know the value of their hard-earned money and are not eager to part from it.
If you want to be truly wealthy, then work at eliminating all of your consumer debt
payments right now. How much money would that allow you to free up every month? How much money would you now be able to put away for your future?
How much better off would you be?
“He that can have patience, can have what he will.”
To be notified next time I post an article, please click the “Follow” button below my headshot in the top left corner.