In most cases, it's pretty obvious whether an expense counts a want or a need. Food? Need. PS4? Want. But sometimes, things gets tricky. Money blog Escaping Dodge explains that, many times, we overestimate our needs. The site rounded up seven questions to help separate these expenses better.
Photo by Lara Cores
Escaping Dodge writer Ree Klein writes:
It's easy to confuse a want as a need. Once you're clear about what you're doing, you can make better choices. Sometimes satisfying a want is ok; the key is to be honest about what you're doing.
Of course, this a really general way to weed out wants from needs. Your decision might be a little more complex -- Klein mentions that there are probably more questions that need to be asked. But if you're on the fence about a purchase, or you're looking to simplify your lifestyle, the following seven questions might help:
- Would I still buy this if I had to use the last X dollars to my name?
- Would tragedy strike if I waited 30 days to buy this?
- Is there another way to solve the problem without spending any money?
- Do I already have something similar to this?
- Could I borrow this from someone instead of buying one for myself?
- Could I rent this instead of buying it and save some money?
- Can I repair the one I have instead of buying a new one?
Again, this isn't an absolute way to make spending decisions. Also, there's nothing wrong with spending money on wants. But if you want to spend less, or you have a habit of confusing wants and needs, these questions can help you get started.
Klein offers more great insight on spending habits. Check out her full post.
Spender Vs. Saver -- Which One Are You? [Escaping Dodge]