Need, Desire and Cash

Posted on Sunday, January 4, 2009 in Finance

Need is a relative thing these days
It’s bordered on desire
The high-tech world is full of bright shiny things
We think that we really require
-Jimmy Buffett, “Tonight I Just Need My Guitar”

Many of us place great value on material “things” whether we are fully aware or not. This is a decade of debt, while people stretch their credit to the limit trying to buy a bigger house, a fancier TV, a faster computer, a new car – the list goes on. Having been caught up in all of that myself, these days I am pushing a message of living within one’s own means.

I found an article on CreditShout that talks about some interesting survey results regarding people who spend on credit: on average, respondents considered their cell phones, televisions and personal computers to be “necessities” in their lives.

I tell anyone who will listen (which is basically no one) that there are three necessities in day-to-day finances:

Shelter
Food
Transportation

Let me list them again: the only necessary expenses are shelter, food, and transportation – that’s all. Everything else is a luxury and not strictly required to survive and advance. Cell phones may be useful in emergencies, but their absence is unlikely to cause serious harm.

When my wife was unable to work because of her health and need for surgery, we had to tighten our proverbial belts to make sure we could meet expenses with just one paycheque. Although we both enjoyed watching television, we realized right away that dropping cable would save us almost $1000 every year.

Three years later we still don’t have cable even though we can afford to have it again. By cutting out that unneeded luxury we not only saved a lot of money, we found our lives more enriched because we were spending more time together.