My friend Russ was recently talking about buying a new computer. I asked him if he needed a new one, and he laughed and said “Need is such a strong word”. Of course he is right. He wants a new computer, but certainly doesn’t need one.
I bring this up, because so often people confuse need and want. What do we really need to spend money on? Food, shelter and healthcare. We end up in the ‘want’ category pretty fast. Mind you, wanting something is ok. You work hard for your money, there is nothing wrong with wanting a new car, a new computer, a vacation to Europe.
The problem comes when confusing need with want when money is short. It’s not just an issue for people with limited resources. In a 2009 survey it was found that 78% of NFL players were bankrupt or had severe money problems within two years of retirement. Most of these guys made many millions during their careers. But they had big problems with ’want’ versus ’need’ and all their money is gone.
Do we ’need’ an iPhone, country club membership, Coach handbag, or Porsche 911? Probably not. Even for our wants are we considering buying used? A six year old Porsche will cost half what a new one does. A six year old Toyota Camry will cost 1/10th as much.
I talk all the time with people who are worried about making ends meet, or worried about having enough money in retirement. Yet those same people spend thousands to tens or hundreds of thousands of dollars on wants (usually brand new shiny ones). And then they continue to sweat making ends meet, or having enough money for retirement.
I want a custom 737 on standby to fly me anywhere I want to go. But it’s a want and I know it, so it’s not happening anytime soon. Need is a strong word. So if it’s merely a want, consider if fulfilling it will potentially bring you financial hardship down the road. And if so, it’s not really even a ’want’ is it?