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Take charge of your finances: focus on ‘wants’ rather than ‘needs’

Our financial destiny depends not on how much we earn or how much we spend; it depends on whether we are in charge of our finances and how well we control them. Saying that there is nothing wrong with spending – quite the reverse, it is one of the inevitabilities of life today – but one should know what they spend on and how much they spend is not new; there have been numerous books and blog posts written about that. Awareness of spending and spending habits is one of the two keys to controlling it. The other key to controlling spending, and being in charge of our money is about deciding on what to spend and on what not to spend.

And here is where the whole money management game becomes really interesting and exciting. Being present and aware of what we spend on may be difficult (let’s face it, being present is generally difficult in our Western civilisations) but it is still trivial – we either work on it and achieve it or not; there is no intellectual challenge. Working out how to decide what we spend on and generally our spending priorities is different because any decision need comparison and analysis; and analysis needs knowledge, information and frameworks of reference.

No wonder that this area – deciding spending priorities – is the one that is very prone to dogma. A dogma about which I was reminded by some comments on the debt busting articles I have been publishing. And the dogma goes like this:

For sound money management look after your ‘needs’ not after your ‘wants’

Tonight, I would like to put forward to you the financial wisdom of doing exactly the opposite, namely

If you wish to take charge of your finances

focus on your ‘wants’ not your ‘needs’

And my argument develops along two different lines. First, our needs are inevitably rather simple and basic – we need shelter, food, drink (water) and clothing. There are other needs that occur from time to time – like the need to procreate. In our ‘needs’ we are very similar to any other animal, really – we need the things that help us stay alive but not necessarily make us thrive and blossom. What makes us human is not our ‘needs’, it is our ‘wants’ – our want for comfort, warmth, delicacies and love. What makes us human is our thirst for knowledge, joy and fun.

Second, suppressing our ‘wants’ often results in making us feeling deprived. By refusing ourselves what we want we crave it more till the gates of restraint brake down and we find that we succumb to the want(s) with wild abandon rather than controlled enjoyment. Danger lurks in wild abandon – from over-eating to over-spending; from obsession to compulsion. I believe that this wild abandon following the suppression of our ‘wants’ is one of the main reasons for over-spending and getting in debt; the other one is innate stupidity and ignorance but this is another conversation.

This is why I believe that we need to master our ‘wants’ to be able to achieve a level of mastery in controlling our finances. I have direct experience of this and discovered how to do it the hard way. Have I mentioned before that I have some wants that don’t come cheap? Like the one for shoes (yep, I am really a cliché), the one for electronics and the one for jewellery. Three years ago I had 42 pairs of shoes (and lived in two pairs of canvas shoes), three lap-tops and two iPods (and everything in-between), and a friend claims that my sons’ wives will be very lucky women referring to my jewellery.

If we were to get out of the financial hole that the financial crash and long term irresponsibility got us in, this had to stop – no more shoes, gadgets and fancy rings. But my soul wept and my mind revolted. I tried ‘look after needs not wants’ thinking and decision making. I only wanted more and felt more deprived. Until I devised an exercise.

It is simple really.

  • Imagine yourself in a situation where you are told that you have to leave your house and will never come back. You are allowed to take with 20 items, have 20 minutes to pack and won’t be allowed to buy anything for one year.
  • Get a pen and a piece of paper and very quickly write down the 20 items you’ll take with you – it is important to do this quickly and without too much thinking about it; this is how you end up writing the things you want rather than the things you think you should have. That’s right: stop being so sensible! This is about ‘wants’ after all and if you feel like taking your six inch heels with you so be it.
  • Once you have written 20 items it is time to start thinking: look at them carefully and decide which items you are going to take if you are allowed only 10; how about if you are allowed only 5?
  • Do you have your 5 items? Look at them carefully – these items represent your core ‘wants’; the wants there is no point trying to ignore or restrict because you will feel deprived.
  • Allow yourself to have these items: stand up, look in a mirror and give yourself permission to have them.
  • You are done – your wants will never trouble you again and you just became the master of your financial destiny.

I developed this exercise, completed it two years ago and never since then have been a victim of ‘wild abandon’ and all that comes with it. Still buy jewellery but now it is about controlled enjoyment.

Master your wants to be able to control your finances.

25 thoughts on “Take charge of your finances: focus on ‘wants’ rather than ‘needs’”

  1. Years ago, we were told that we may evacuate in a few hours  due to a fire.  Aside from clothes and valuables, we took pictures.  The things you cannot replace are important.  It is right after saving people.  Thankfully, we did not evacuate , but it was life changing.
    Our wants are pretty much under control and our needs are pretty low key.  I am more cocerned when the saving stops and I start spending in retirement.  I am trying to ease into it.

    • @Krant: So you have experience with it, uh? Glad to hear that you have mastered your ‘wants’ – and taking pictures makes sense (means you should not deprive yourself of them). Retirement will be fine – have you seen the calculator John designed? It help budget accounting for different variables (like assumptions of life, care etc.). May be worth playing around with it just to aleviate the concern a bit :).

  2. That is excellent advice and carries over into other facets of life. 
    I’m thinking of deciding to cut spending in order to change line of work.  I know people who are miserable in their work and say they ‘can’t’ change because they will lose their big cars or expensive holidays.  They are spending more of their awake time at work than driving their flash cars or jetting away on holiday.
    These are often the same people who told me I was ‘lucky’ to work for myself.

    • @Pat: Funny you should say this. I was just thinking whether similar approach will work about eating – let’s say imagining a table over-loaded with all kinds of food and making yourself go very fast for your top choices. Then we’ll know what we have to allow ourselves instead of being prohibitive and craving it. What do you think?

  3. I leaned a huge lesson here myself. I had a beautiful first floor apartment in Hoboken (across the river from NYC) and then Hurricane Sandy came and wiped out everything. While its a hassle to get things like a new couch, it’s actuall sort of a relief. I don’t need to carry around all that crap with me, I can start over. I also learned that I really need way less to be happy. 

    • @Listen Money Matters: You’ve done so well! Sorry to hear about your flat but at the same time you took away a positive lesson. And welcome on The Money Principle :).

  4. I agree that if you try to ignore your wants, you are setting yourself up for failure. The human mind only has so much willpower and motivation. My problem with this exercise is two-fold. The first is practical.  What constitutes as an item? Are my tools a single item? Are they three items (3 toolboxes), or are they hundreds of screwdrivers, wrenches, sockets, clamps, hammers, saws, screws, nails, and shop lights?
    The other is more emotional. Such exercises have the horrible, soul-sucking feel of minimalism to me. I like my stuff. People talk about packing things away and if you don’t use it for a month get rid of it. Well, almost everything I own is packed away right now and I miss it horribly. I like knowing that when I need a tool, or feel like watching a movie or reading a book, it’s available and accessible.

    • @Edward: Ha, ha! Trust you to make re-visit this whole thing (btw, John said he will also have a problem with his tools and his stuff). I think we can say that your tool box xounts as one object. The point is not that; the point is that if you are thinking of taking it your tools are really important for you and you should allow yourself to buy some from time to time – need them or not. Ironically, one of the effects is that you stop wanting badly to indulge because you know you can do it. As to missng your stuff – I know what you mean. But I am getting really wound up about the c*ap I have and keep and will use Joe’s approach to getting rid of it. A minimalst I am not, though.

  5. I would take my laptop and 4 items of clothing. OMG I am addicted to that little machine. Watching the animals has been very interesting, especially when we change something to their habits. They adjust for a day, then life goes on. No complications.

    • @Pauline: My computer was the top item for me as well. The exercise has different effects when done though; one was that I realise that I buy jewellery not so much for itself but because this was my way to store stories – so once I found other ways to keep my stories jewellery buying is under control. One of my top five items was soap – so, yes, cleanliness and comfort are important for me and backpacking is out. And so on….

  6. I think it’s wise to write up a list of wants and build a game plan on how you’re going to get there! I did and I’ve been sucessful at it!  

    • @SaveSpendSplurge: I have a ton of wants as well – this is how I got in the whole debt mess to begin with. But when we started paying it off, I decided that I’ll work on odentifying my wants and learning to control those (the exercise is key, I found). Everything changed. In fact there were things I found that were unexpected; changed: for example, I always bought jewellery and thought that the pieces I bought is what I can’t resist. Doing the exercise made me realise that it is not jewellery I like, it is the stories that I store in it. Now I write my stories: cheaper and more enjoyable.

  7. Really beautiful thoughts you have summarized here. One of the greatest article that can change ones life. There’s one word for your work only – ‘Awesome’ .
    Thanks for sharing such beautiful article with all of us. Hope you would like to share such thoughts again.


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