Needs versus wants: how identifying your priorities helps you budget

Needs versus wants

Recently I had a wardrobe crisis. How come? I have a wardrobe full of things! But I keep clothing for a long time, many items are pretty tatty and I am bored with the others. Most were second-hand in the first place. So I NEEDED new clothes! Obviously, I didn’t actually need them. It wasn’t as if I would have to leave the house naked. It made me think about the idea of needs versus wants.

My wardrobe crisis arrived in the middle of a no-spend January. All the sales were on and it was frustrating not being able to give in to my inclination to buy some new outfits.

I did actually buy some very reduced items once January was over. I was glad I had waited in the end as I went into a couple of shops and found a lot of items at a 75% discount. But did I need them? Truthfully, I could have gone without. But after that I didn’t buy any other new clothes until the boot sale season arrive (so they were second-hand).

The bare necessities

My wardrobe crisis made me consider the things I believe I need. Many are not basic necessities. Some are definitely first world requirements. Take my iPhone. It is definitely not a basic necessity. I could survive with a more basic model and could manage without a mobile phone at all. However, I use my iPhone to sell online, to write my blog and to record my YouTube videos, so it would be difficult to manage without it and make a living, without buying something else, like a camera.

Ditto my laptop. I survived without one for many years. If I wanted to use a computer I used one at work. However, now that I am self-employed I do need some kind of laptop.

Our actual needs are fairly basic, of course. When we are trying to pay off debts or put money into an emergency fund it helps to bear this in mind.  A roof over our heads, a way to keep warm and cook, nourishing food and water and some basic clothing are what we need to survive. This attention to what you really need can help you retain your focus when it comes to your budget.

Other things we could do without but would rather not…

Once you get past basic survival, the idea of needs versus wants get a little greyer. When you have your actual survival needs sorted, it is only natural to aim for items that add quality to your life, that enrich your existence and make things somewhat easier.

For me, I would struggle without my little car, as getting to my Mum’s would mean two buses and would take about two and a half hours on public transport. A car enables me to go shopping for bargains too, buy stock for my eBay shop and to get around in my leisure time. I could do without a car, but it is a priority that I am willing to budget for.

However, we only ever drive fuel efficient old bangers! We are not prepared to take on debt for a car. I flinch when people I know who don’t earn very much tell me about the great lease agreement they have on a shiny new car that cost more that their annual salary. That way madness lies!

That’s entertainment

I could live without a TV. I listen to a lot of radio, especially Radio 4, and I love to read. However, we don’t go out a lot to spend money in pubs, restaurants or the cinema. We love to watch great dramas and films on TV, so this is another thing we are happy to pay for.

However, we don’t have a huge package on satellite or cable. We have the absolute basic TV package on Sky and Netflix.  At one point we had loads of channels but hardly watched any of them. Our most viewed channel is BBC on demand and I watch a lot of YouTube. However, I do that on my phone a lot of the time.

On a 1-10 scale of my needs versus wants TV is about a 5. I could do without, but I would miss it sometimes (Justin would miss it more)!

Life’s a beach

A holiday isn’t an essential for anyone. However, we are prepared to budget for at least one inexpensive break each year, sometimes two. We shop around, use Air B&B and find budget accommodation wherever we can. In the past we did a lot of camping, caravanning and have also done house swapping. We generally go self catering and save money by preparing most of our meals whilst away.

Of course, we could do without a holiday if we needed to. But it is another thing that enriches our lives so we are prepared to save for it.

Food intolerances

Food intolerances are another first world problem. If I was really hungry I would eat whatever I could get my hands on. There is a general perception that food intolerances are just fussiness. I’m not naturally fussy at all. However, I would rather do without the bloating, rushing to the loo and stomach pains! This means that I avoid lactose, don’t eat gluten and would rather not eat onions. I need to eat, but I don’t need to eat stuff that will mess up my digestive system.

I am not talking actual food allergies here or issues such as coeliac disease. These are serious health conditions and needs versus wants doesn’t come into it.

The ideal home

We have just finished a DIY project on our sitting room – you may have seen us on YouTube. It wasn’t essential. If we were broke it wouldn’t have happened. Even so, we were happy to go for a budget approach. We spent around £200 on paint, a new rug and a unit from an auction and are very pleased with the end result.

I am often heard to say that we ‘need’ a new kitchen. However, this would cost thousands so we will put up with the rather tatty one that we have.  It is perfectly functional. We painted the walls and furniture and it looks great! We don’t need a new kitchen; that definitely falls into the wants category.

We love our house but don’t want to go into debt to make it fit into the pages of Ideal Home magazine.

Don’t bust your budget

There are so many things that people think they need that cause them to spend more money than they have spare. They bust their budget on everything from holidays to new clothes, from meals out to shiny cars. This is all fine if you can afford it. However, if you have a goal to become free of debt, if you are saving towards your retirement or want to focus your efforts on a house deposit (whatever your end goal is), you need to think differently.

Considering needs versus wants before you make any purchases can help you stick to your budget. Need a new coat? You already have three. Need new shoes? The heel is falling off, so OK maybe (but can you get them second-hand or repair the heel first?).

Putting your impulse to buy something into the context of how well you will survive without it generally makes you realise you don’t want it as much as you want to achieve your financial goals.