Comments on: The Three Basic Money Groups – And Why So Many People Struggle With Their Personal Finances

By: tabuxander

tabuxander — Sun, 16 Mar 2008 03:04:07 +0000

Temptation is like a desease to us. Sometimes we don’t really want to buy luxurious items. We try so hard to fight but in the end we lose the battle.

By: AnKa

AnKa — Sun, 02 Mar 2008 15:57:42 +0000

I think this is indeed a very astute observation about the 3 ways to use money. And I agree with many other responses that the definition of ‘need’ is ridiculously warped in our society. I have had people tell me in all seriousness that manicures are a ‘basic need’. As in ‘there is no reason to let yourself go even if you’re not rolling in it’.
I think it is important to count your blessings every day.
I have a cleaning lady, that I will tell anyone who asks, is the best money we spend. But don’t get me wrong – I do not consider her a necessity!

Realize how many ‘wants’ you already have in your life, and maybe you get enough satisfaction out of that presumably long list that you can deny yourself the splurge you were about to make thinking ‘I deserve it’.

By: kathryn

kathryn — Thu, 28 Feb 2008 12:05:38 +0000

daydreamr brings up an interesting point…wants vs needs ends up being very personal. (Mandatory auto insurance is optional but you cannot live without a GPS?)

I think Trent’s point was that we should each examine the balance between our needs and wants, but I’m sure it is also important to examine our categories carefully. And remember, we are good at rationalizing almost anything. Among the things that I’ve turned from “wants” to “needs” are a gym membership (keeping us healthy) and cell phones (to be reachable by wandering teenager.) Oh, yes, and my internet connection, so I can read the The Simple Dollar. ;)

By: Betsy

Betsy — Wed, 27 Feb 2008 18:22:39 +0000

Just after college I made up a simple budget for myself that has worked well for me. All money that comes into my life gets divided into three pots: 1/2 into checking, 1/3 into saving and the rest into cash to be spent as I wish. Or “live on half, save a third and spend the rest”. It sounds impossible, but most people earning greater than minimum wage can live on half.

By: daydreamr

daydreamr — Tue, 26 Feb 2008 20:01:46 +0000

Steve makes an interesting point that everything we spend on is a want. I agree to a certain extent. If you compare what it takes to survive and what it takes to live according to standards of society, there is a big difference. Of course we all can’t grow our own food and live with out certain utilities. I went without power for a while and didn’t miss it. However, now that I have it back, it is a luxury that I prefer having. I went without car insurance and saved more in the process even compared to the fine and small increase in my insurance once I got caught and was forced to comply w/the laws. But things like TV and especially cable are not needs by any means. Then there are the things that make your life easier. I bought a GPS and now I don’t know how I would ever live without it. It keeps me from getting lost. Of course the $200 could have gone into a savings account…The fact of the matter is that people get addicted to spending money. They also get addicted to many things that are not drugs. TV is an addiction as is eating fast food, gambling, excercise (although it’s healthy, paying for a monthly gym membership could be considered a luxury). Like exercise, there are a lot of double standards. We need food for survival. But do we need to buy the very best name brands and organic/natural products? Sometimes labels are misleading and cause people to justify spending the extra buck on something.

By: Nicole

Nicole — Tue, 26 Feb 2008 16:12:17 +0000

My fiance and I are expecting a baby boy any day now. And due to a lot of circumstances, including the impending birth of our son, we have taken a long, hard look at our finances and are making some difficult but worthwhile changes. Reading this post just reiterated the importance of dilligence, determination, and self-rewards during this process. It is a fine balance of these characteristcs that will bring us to our ultimate goal- financial freedom.

THanks for the post- I love this blog!

By: colonel cash

colonel cash — Tue, 26 Feb 2008 11:36:49 +0000

Needs, wants, and, haves. We all need what we need, live for what we want, and in our hurried lives, lose appreciation for what we have.

Maybe if we took a little time enjoying that which we already have, we wouldn’t be quite so inclined to think about what we want.

Perhaps we already have what we need…

By: EJ

EJ — Tue, 26 Feb 2008 00:22:29 +0000

I come at this problem from the other extreme: no matter how much money I save, it can feel like it’s never enough. It’s interesting that I’d been thinking about this very problem today.

I work in a grocery store so my lunch is usually whatever free samples are available, but the free sample lady was off work today, so I didn’t get anything and spent the rest of the day hungry and miserable. I know it’s crazy, but I just couldn’t make myself buy something to eat.

I think I need a reverse budget – set aside an amount of money that I MUST spend every month.

By: kleanchap

kleanchap — Mon, 25 Feb 2008 22:27:05 +0000

It is the luxury items that get to me. The few that I buy are expensive and top of the line. It mainly the reliability factor for which I do not mind spending a few extra dollars.

By: Minimum Wage

Minimum Wage — Mon, 25 Feb 2008 21:17:21 +0000

All needs and no wants makes one grumpy.

By: Tomski

Tomski — Mon, 25 Feb 2008 20:31:03 +0000

I would first pay off any short-term debt you might have. That means if you took on some loan to buy that HD tv. After that is sorted out start saving. But also start saving for your pleasure things. It feels much better paying you HD tv cash than with a loan.

By: KC

KC — Mon, 25 Feb 2008 19:37:51 +0000

I think I’m just a lucky person cause I am wired differently. For instance I see my cell phone as a detriment. Sure, I have one for emergencies, but its a cheap pre-pay that costs me $80/year. Why is it a detriment? Cause I hate talking on the phone and my mother and husband both call me all the da– time. I just keep the phone off unless I need it.

Same with the flat screen TV. My tv gets a great pic with the digital signal we receive. Whereas if you don’t also buy the HD signal when you buy the flat screen you get a pretty crappy picture. Also flat screen TVs can “walk” out of your house a lot quicker then the huge old ones. The old ones don’t have much pawn shop value and aren’t going to make your home a target to thieve. I know several people who have had their homes broken into and the only thing stolen were the flat screen tvs – its a problem.

For some strange reason I like and am happy with a simple life – I’m not a hermit, by any means, but I just like things uncomplicated. And its a whole lot cheaper.

By: Money Blue Book

Money Blue Book — Mon, 25 Feb 2008 18:01:20 +0000

I think it’s important to save a pile for the future, but let’s not forget the importance of living for the now too. Even seemingly luxury expenses like pricey once in a lifetime Superbowl tickets are worth the cost of the experience. Those are quasi necessities that make life great. Spend on memories, not material things I always say.
-R

By: Ron@TheWisdomJournal

Ron@TheWisdomJournal — Mon, 25 Feb 2008 17:54:39 +0000

Be careful what “luxuries” you sample. I had a wise person once tell me tat. He said, “A luxury, once sampled, has a tendency to become a ‘necessity’.”

By: Shareef

Shareef — Mon, 25 Feb 2008 17:11:50 +0000

Trent, thanks for this post. I’ll be debt free (except for student loans) in Aug, and one thing that I struggled with early on was trying to put ALL of my money toward debt. It was more of a Dave Ramsey focused approach. Unfortunately, that approach led me to be frustrated and would cause me to sometimes spend even more on luxuries than I normally would. Once I developed a budget and gave myself a little fun money, I was right on track. Thanks for all of the work that you do!

By: Sandy E.

Sandy E. — Mon, 25 Feb 2008 16:50:54 +0000

I used to have a problem differentiating needs from wants, until I changed those words to essentials and nonessentials.

By: AaronO

AaronO — Mon, 25 Feb 2008 16:22:45 +0000

I think everyone’s wants exceed their needs. I believe the problem is a person’s patience level. Being financially responsible and frugal will pay off over time. But by using credit and going into debt, you can have the immediate satisfaction of having those “wants”. It’s like investing. Paying your debt and saving your money will have larger returns over time. Plus you can save more money with less debt allowing you to actually afford those “wants”. Patience is a virtue.

By: Frugal Dad

Frugal Dad — Mon, 25 Feb 2008 16:11:42 +0000

It’s good advice to recommend a balanced approach. I’ve always appreciated that about your site, as some PF blogs recommend one extreme or the other (spend/save). You can only cut so deep into spending before it starts to really hurt. If you grow to resent your own plan you will ultimately scuttle the whole thing and revert back to spending money like water.

By: Steve Olson

Steve Olson — Mon, 25 Feb 2008 16:08:09 +0000

There is a fundemnetal problem with assesing needs and wants. I had a long discussion with a famous economics professor about this subject and he said he has come teach students that there are no neccessities. All things you buy are luxuries. And the langer the conversations went on, the more I realized he was right. Almost everything we purchase are luxuries. I suppose we need air, water, food, and shelter to survive, but in modern western society all there things have levels of luxry to them. Some say education is a neccessity, but it isn’t. I’ve heard people say getting into a top 50 college is a neccessity. Some people say a computer and telephone are neccessities. I lived just fine for many years without those things and I know people who still do. There is no “need” and “luxury” pile. They are essentially the same for all of us at almost every income level, they are all luxuries. You just “think” you “need” these things, but you can choose to “think” anything you “want.”

I know it is hard to swallow, but I think it is a fundemental truth about our fabulously wealthy society. We just don’t want to admit how rich we really are.

By: Di Di Ross

Di Di Ross — Mon, 25 Feb 2008 15:46:05 +0000

My husband and I are trying to dig ourselves out of a mountain of debt–again. It wasn’t all that long ago that we were debt free, except for the mortgage on our home. After our son was diagnosed with an inoperable brain tumor, everything fell apart including our finances. Although he is a patient at St. Jude Children’s Research Hospital, where all of his medical expenses are covered, we were unable at that time to really make good decisions elsewhere. Now that he is doing better and we have adjusted to life with a chronically ill child, we are attempting to get back on track. We are having to reprioritize our spending, and I am amazed at how easy it has become to forget what the difference between a necessity and a luxury is. Thank you for this refreshing article today. It reinforces everything that we already knew!