Is it a Want or a Need?

As our family started down the path to financial peace, one of the most useful tools that we had was to classify the things in our life as a want or a need . If everyone could agree it was a need, then we made room for it in the budget, regardless of what we needed to do to get there. Otherwise, it was a want, we prioritized it and tried to fit it in as best we can, but only if it made sense.

If your monthly income covers all of your needs then you are doing well. Otherwise, you are going to have to make some decisions about increasing income or temporarily going without.

You would be surprised how often we disagreed about what was a want and what was a need, and how just considering our lives in this way changed the way we approached money. It is pretty easy to decieve yourself on exactly what is a luxury and what isn’t. Here is a simple test that we came up with …

The Want Test

Think about one of your ‘need’. Imagine your life without it for 90 days, or with a substitute that is significantly less expensive.

  • Would I be considerably less safe or comfortable without it?
  • Would it signifcantly disrupt daily life for me or my family if I didn’t have it?
  • Would it cost me a lot cash up front to get rid of it?
  • Would it violate the spirit or the letter of the law if I lost it?
  • If I was counseling to someone else in my situation, would I recommend that they keep it?

If you can honestly answer ‘no’ to all of these questions then it is most likely a want in need’s clothing. Unless you have completed the baby steps then I would recommend that you reduce or eliminate this cost as soon as possible.

Also, I would take some time to consider if over the long term if this expense is more important then retirement, college savings, or investments. If your first answer wasn’t an immediate, unqualitied, unflinching ‘yes’, then you should really reprioritize this item in your life. I promise you, it will be worth it!


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