One of the biggest challenges of financial progress is the idea of truly distinguishing between want and need and treating them appropriately. Of course, some of that challenge comes from truly defining what a “want” is and what a “need” is.
For me, a “need” is anything that would cause a significant decline in my quality of life without it or with a lesser version of it. For example, I view my relationship with my wife as a “need” - without it, there would be a notable decline in my quality of life.
Virtually everything else is a “want.” I might desire to have certain things, but my life doesn’t decline significantly in quality if I don’t have it. For example, I view a book I’m excited to read as a “want.”
This difference isn’t always easy to define. Having a roof over my head is a “need,” but how nice does the housing have to be before it starts to slide into the “want” category? A tent? A tiny apartment? A house? How big of a house?
What about human relationships? What do we “need” when it comes to those? Do we need at least a few friendships? Or are those merely wants?
These aren’t easy questions, but they do open up some interesting points when it comes to thinking about personal finance and daily living.
In my eyes, the biggest challenge for most of us to overcome is distinguishing between genuine need and what I like to call “routine wants.”
Routine wants are things that aren’t really necessary for day-to-day life, but are so ingrained in our daily routine that we don’t really like to think about life without those perks.
For example, I have two computers and a tablet. I use them each for different tasks throughout the day. I use my desktop computer for most writing at home - it has a larger screen and is set up at a comfortable desk. I use my laptop for most writing away from home - at the library, for example. I use a tablet for touch-up writing and a lot of reading. I’m not even including my smartphone, which I use for emails and reading while on the go.
Do I need all of those machines? No. Do I use each of them almost every day? Yes. Do I take having them all for granted? Yes. Will I probably replace each one as it needs replacing? It’s not absolutely certain, but likely.
I really only “need” one computer for professional purposes, and that would probably be my laptop. My desktop isn’t a need. My tablet isn’t a need. My phone isn’t a need, either.
Yet, for so many things, I view them as so routine that they don’t even qualify as fulfilled wants in my mind. They just qualify as life, and because of that, it’s often easy to not think about them at all, to gloss over them and move onto unfulfilled wants and desires.
Almost everyone in the modern world does this. We have so many fulfilled, routine wants in our lives that we just gloss over them and move on to other things that we want.
Whenever you read an article that talks about someone barely being able to make ends meet on $200,000 or $300,000 a year, routine fulfilled wants are typically a big part of the picture. They often live in a nice house in a nice neighborhood with nice cars, take a nice trip once or twice a year, have nice furnishings throughout their home, and keep all of that stuff maintained and updated and furnished. Just managing all of that can devour $200,000 a year, and all of it seems completely routine.
So, here’s the key thing to remember: Everyone has a lot of routine, fulfilled wants in their life. Over time, we become so accustomed to those things that we don’t even seriously consider them when we think about cutting our spending.
Routine Wants Lock Out Our Financial Future
The thing is, when we start to put spending on wants “off limits,” we quickly begin to lock in our financial options.
For example, if you won’t even consider downgrading your cell phone plan, you’re locked in to that monthly cost, as well as the irregular cost of replacing your phone.
If you won’t consider eliminating cable, then you’re locked into that monthly cost.
If you won’t consider downsizing your residence, then you’re locked into that monthly cost.
If you won’t consider driving a used car, then you’re locked into a high monthly cost for cars.
If you won’t consider buying store brands for your household supplies or food staples, you’re locked into a regular extra expense whenever you shop for groceries.
If you won’t consider giving up your two morning coffees from the coffee shop near work, then you’re locked into a large extra premium for coffee each month.
It goes on and on and on. When you turn a want into something untouchable in your budget, your basic expenses become higher and the gap between your required expenses and your income becomes smaller. You have less to work with financially. It becomes harder to deal with life emergencies and harder to make ends meet.
The biggest difference between where I’m at (and likely where you’re at) financially and where that family making hundreds of thousands a year and barely making ends meet is at is that they’ve got a lot more expenses that they’ve made routine and untouchable (and some more income as well).
Focus on Those Routine Expenses
If you really want to have a transformative effect on your financial state, the place to start is with all of those routine expenses, that mix of needs and wants that you don’t even consider when you first think about cutting back. It’s those wants that you reflexively think about as being needs that are locking you into your current financial state.
So, sit down and start thinking about each of those expenses. Think about these questions seriously, rather than brushing them off. These things aren’t needs - they’re routine wants that we’ve elevated to an untouchable state.
Housing: What if you were to downsize your housing? What if you were to buy a smaller house, or move to a smaller apartment? What would that really change in your day to day life? And what would that change regarding your financial state?
Start by considering what your housing options are if you cut your total housing expenses by 20%. What kinds of living options are available to you? What if you cut by 40%? Could you find a place to live that meets your needs? If so, why aren’t you doing this and saving hundreds or thousands a month?
Transportation: What if you hung onto your current car for another year or two past when you would likely trade it? What if you started a carpool at work and could leave your car in your driveway a day or two a week? What if you mostly moved to public transportation to get back and forth to work and back and forth to most of your errands and social events? Let’s go even further - what if you got rid of one of your cars entirely?
Again, these moves could potentially save you hundreds a month and yet they’re rarely considered because we make our car into something that’s such a routine want that it becomes a need.
Cable: Do you need cable at all? Do you need as many channels as you have? What about the streaming services you subscribe to - do you actually use them?
What does a cable-free life look like? Can you get all of the television entertainment you need with a small digital antenna that gets free over-the-air signals? What if that’s in conjunction with a single streaming service?
Again, cable often becomes something that’s beyond question, when it shouldn’t be.
Internet: Do you need home internet service, especially if you have a good data plan on your cell phone? Do you actually use your home internet service very much? Could it be replaced with usage of your cellular data plan? Or could it be replaced with, say, just reading a book?
Rather than thinking about how you could potentially use the internet, think about how you actually use the internet. Do you really use it for anything worthwhile and valuable for your life? Do you use it enough to make it worth supplementing your cellular data plan?
Cell phones: Do you actually need the cell phone plan you have? What about the cell phone you’re using? How much use do you actually get from it that couldn’t be replaced by home internet service and continuing to use your current phone in WiFi range? If you can’t do this, what about simply downsizing your calling and data plan to match what you’re actually using?
Furthermore, consider what you’re actually using your cell phone for. What value does it actually contribute to your life? What couldn’t be handled by home internet paired with a very simple cell plan?
Other expenses: What things do you spend money on that you just take completely for granted? Do you eat out most nights without skipping a beat? What if you just started prepping your meals at home instead? What about travel? This can go on and on and on… there should be nothing sacred in this journey.
Appreciate What You Have
As you go through this process, one feeling will likely bubble to the top: Gosh, I have a lot of good things in my life that I don’t truly need. It’s true - almost everyone in the Western world lives a life of amazing abundance. We have homes with lots of space, tons of possessions, infinite entertainment options… it goes on and on and on.
We all have so much in our lives, far more than we have time to actually fully enjoy and appreciate, and yet we layer on more and more. As we do it, we start taking some of the previous layers completely for granted, thinking of things like our home and our relationships and our entertainment options and our current possessions completely for granted.
Don’t fall into that trap. Make a conscious effort to continually appreciate what you have. In doing that, you don’t lose sight of the abundance in your life that you completely take for granted.
The most effective way I’ve found for doing this is to make a daily habit out of creating a gratitude journal. Each day, simply list five things you’re grateful for in your life. What are you grateful for right now? Are you grateful for relationships? Are you grateful for a specific thing that you have? Are you grateful for the simple little things that life just gives us, like a lung full of fresh air or a gulp of fresh water?
Doing this consistently, day after day, for a long period of time really builds up a sense of the enormous abundance we have in our lives, and when you have that sense inside of you, it becomes much easier to start digging through those routine wants.
Remember, This Isn’t About Eliminating All Wants
This isn’t about eliminating everything “fun” in our lives. It’s about simply digging through the mountain of things in our lives that we just take for granted and either appreciating them or realizing that they don’t add the value that we once thought.
This isn’t about demanding that someone eliminates their cell phone, but just asking whether or not the value they get from their data plan and from home internet access adds up to the cost of stress and worry about the future from not being able to plan ahead as well as we’d like.
The goal is reflection. The goal is to ask questions that we’re not used to asking, even if they’re a bit uncomfortable. The goal is to sometimes come up with some surprising answers. The goal is, even if you don’t decide to make a change, to appreciate the great thing that you have already.
The thing is, the list of things we truly need is surprisingly small. We actually need very little shelter, very basic food and water, very basic clothing. Everything else is a want, and when we start considering all of that other stuff as fulfilled wants, we really begin to see the amazing abundance of our lives.
When we begin to see our life as overflowing with abundance, it becomes a lot easier to let go of a piece here and a piece there.
When we start to let go of a piece here and a piece there, we suddenly find it a lot easier to meet our financial goals, which not only secures our future but adds a great deal of peace of mind to our lives. I’d argue that peace of mind for the future and a bit of financial security is far more of a “need” than many of the routine wants that we just don’t question.
As you spend some time reflecting on the year that’s past and the year to come this week, give some thoughts to what things in your life are routine wants and what lasting value they really provide in your life, and whether or not those resources might provide more value elsewhere in your life.