How to Identify Needs Vs. Wants when Reorganizing Costs

Often times our lives get so crowded with so many wants we often forget and loose site of what we only need. A good way to begin saving money or cut back on expenses is first by identifying the difference between a need and a want. By learning the difference between the two, you can then begin eliminating some of your wants and then pocket the savings.

Lets first define the difference between the two.

A need is something, which is necessary in order to live. You need food and water because without it you would die. Clothing is a need, however a very expensive pair of jeans is a want. Food is a need, however the doughnuts are not.

A want is something you wish for and would like to have. It is not necessary and you could survive without it. A want is a luxury. Your CD player is a want.

Look around your house and think about everything you have and whether it is a want or a need. Toothpaste and a toothbrush is a need. You need these things for good hygiene and so you can have healthy gums and teeth. However, your DVD collection is a want. You can live without them. You don't need DVD's.

Once you have determined the difference, you can then begin eliminating your wants and begin saving money. It may or may not be necessary to cut out every single want in your life. After all, life wouldn't be much fun with out some wants. Each person is different in determining how much money they want or need to save and then eliminating that amount in wants.

First, make a list of all your bills and go over them one by one. Ask yourself the following questions:

1. Are there any wants that is making your bills higher?

2. Do you want or need satellite TV?

3. Do you want or need a cell phone and a landline phone?

4. Do you want or need to pay a higher DSL service for your internet?

Second, look at how much you are spending on groceries and household items. Pull out some old receipts if you have them or think about these questions the next time you go shopping:

1. What and how many things did you buy that was a want?

2. Was the case of Pepsi you bought a want or a need? Could you live without it? (Be honest.)

3. What did you buy that you didn't use or is still sitting in the cupboard?

4. What did your children talk you into buying that you didn't need?

There are always miscellaneous expenses that sneak up on you. Keep track of what you are buying extra that is not included in your regular shopping trip or monthly bills and ask yourself the following:

1. When you went to fill up your car with gas, did you pick up anything that was a want?

2. Did you go out to eat because you didn't feel like cooking? If so, this is a want.

3. Was there a good sale on shoes in which you wanted to add another pair to your collection?

4. What services are you paying for that you can do yourself? (Example: lawn care, manicures)

The bottom line is honestly. Wants can be very overpowering and can almost seem as if they are a need. However, if you are serious about saving money and cutting back on expenses the only way to do this is to be honest with yourself and ask yourself:

1. Can I live without it? Can your children live without it?

2. Can you do without it or substitute something else to avoid spending money?

3. If something I need is broken, can I fix it myself? This way I don't spend more money buying a new one.

4. If you do need to buy something, is there a less expensive item that can be purchased?

Remember, it takes will power and practice to identify the difference between your wants and needs. To help with this, remind yourself what you are saving for and keep track every month how much you cut back on and how much you saved.