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Want or a Need: How To Control Your Spending Habits:

Is that a WANT or a NEED?

I used to hate hearing that question from my parents.

If they had to ask, I knew that I was getting ready to purchase a WANT, not a NEED.

My feelings towards that question haven’t changed over the years. But my appreciation for that question has increased.

This morning I read an excellent article by Stefanie O’Connell called “Is Increased Income a Threat to my Financial Goals?”  Stephanie is living the broke dream in New York and for the first time is starting to make money. Her article details the issues she is having with setting new boundaries in her life.

Where do you draw the line at being frugal and spending your hard earned money?

Isn’t it funny that finally having money causes its own set of problems? Definitely a first world problem.

Aaron and I just paid off a significant chunk of our debt. We still have some pretty hefty financial goals (retirement and paying off our home), so we aren’t home free, but I’m already noticing the money spending creep.

The money creep is my term for the little extra’s that just keep popping into my budget now that I’m loosening our spending.

There is always one extra thing that I just have to have at the grocery store, the mall or my budget buster – REI.

Since reading Stefanie’s article I’ve been thinking about my spending habits all day long.

  • Where do a draw the line between WANTS and NEEDS?
  • How frugal should I be?
  • Is so much of my life determined by my future goals that I forget to live for the here and now?

I can take care of all of my needs, so at this point, the question is what wants are worth spending my money on?  I have three questions I ask myself before spending money.

Obviously, this is a very personal question for everyone, since everyone has different spending priorities.  The goal is to change your view of money to help you control your spending habits and change your spending patterns.

Three Questions to ask yourself before Spending Money

1.  Is this a WANT or a NEED?Want or Need How to Control Your Spending - 3 Questions to ask yourself before making a large purchase

This is kind of a trick question in some ways. It is very easy to rationalize a WANT into becoming a NEED.

Just because, you really, really want something doesn’t mean it is a suddenly a need.

You see a lot of people who get into financial trouble because they “needed a car.”

A car can be a legitimate need, but the level of car is what can turn on your want meter. The trick is to find the balance between your genuine need for a car with your want to have the latest and greatest vehicle on the market.

A car is an extreme example, but the same concept holds true for virtually all purchases in our lives.

At the beginning of each school year, we used to give the girls a set amount of money for school clothing. They learned very quickly that purchasing 3-4 outfits was preferable to getting 1 name brand outfit for the same price.

If you love name brand clothing at phenomenal prices you need to check out ThredUp, this is my new secret tool for dressing in style on a budget.

There is absolutely nothing wrong with having nice stuff – the trick is realizing there is a time and a place for purchasing expensive products.

Once you’ve determined your dealing with a WANT, you have to decide if your WANT is worthy of your hard earned money. You work hard and don’t want to waste your money on frivolous junk.

This leads to the second question you should be asking yourself.

2.  Are you “WANTS” worth the Price?

I went swimming suit shopping last weekend and found an amazing suit for $130. I really wanted that swimming suit.

The girls reading this totally understand – it fit right, it looked cute on me and had those nice little tummy tucking panels –  I’m approaching 40 now, so these things are more important than they used to be.

I loved it, but even though I had the money in my clothing budget I just couldn’t do it. I can’t rationalize spending that much money on a swimming suit.

I’ll find a suit for $30-40 and be satisfied and then spend the extra money elsewhere.

You may choose to buy the suit and feel that it was worth every penny.  Your decision to purchase the suit is 100% okay as long as it is in your budget, you have thought through the decision and are willing to sacrifice in other parts of your budget.

What matters is the thought process behind the decision. If you are purchasing a want you need to ask yourself two questions:

  • Is the item in the budget?

In my case, I haven’t purchased clothing recently, so I had more than enough money in my budget.

Sometimes you may not have the money in a specific category but can switch things around for the month.  Either option is fine as long as you are staying within your budget.

  • Is this a quality product that is worth the price?

It was a very high-quality suit, but for me, it wasn’t worth the price.  My need for a cute swimming suit wasn’t high enough for me to willingly spend $130.

I doubt I’ll ever be able to rationalize that much money for a swimming suit, but I’ve spent that type of money on gear for my hobbies.  It is all about making a decision based on your financial situation, the product, and your wants/needs.

What matters is that you aren’t spending money you don’t have on a product you don’t really need.

I wrote more extensively about this type of decision-making process in this post:  Frugal Living: Why I still dye my own hair.

3.  Is This a Long Term Purchase?

The last factor to review is the long-term nature of your spending.

You should spend a lot more money and time researching purchases that you’ll be using for multiple years.  Short term stuff that you can get cheaply will most likely not get as much scrutiny.

Aaron and I are learning to scuba dive right now. We spent hours researching different dive shops, looking at gear and talking to the dive guys before making our decision. Diving can be a very dangerous sport (I’m kind of scared for the pool class this weekend), so we wanted to make sure we were getting the best education possible for our money.

Three days after I skipped out on my perfect swimming suit I was able to upgrade my scuba gear because I had a little extra money sitting around in my clothing budget. For me, this was a total win.

My goal is to make many happy memories with my husband and friends on our upcoming trip and having nice gear will make all the difference in my confidence levels.

Why Learning to Control your Spending Matters

It isn’t so much the money you are spending, but the thought process behind your spending that keeps you from over-spending and allowing lifestyle spending creep.

When you take the time to research your purchases, avoid rash decisions and don’t get caught up in the hype that comes from having the latest and greatest product you will always make better spending decisions.

Every time you make a conscious spending decision you making better spending habits that will help you save money over and over again.

I’ve learned (the hard way) that when I control my spending everything else in my life just goes better.

When your spending is under control, you’re not stressed about money and you can afford more of the things you like.

If you can learn to be frugal you’ll be amazed at how much further your money will go.  The best part is that gradually you don’t even realize that your spending habits have shifted.

Saving money and finding ways to cut costs will become second nature to you!.