Whether the economy is currently experiencing a deep recession or a depression is open to debate, even among economic experts and historians. The reality, however, is that millions of people have lost their jobs, their homes, and perhaps their healthcare. Many have, in fact, been plunged into financial nightmares; and as for those who haven’t encountered financial hardships, at least so far, they are counting their blessings and hoping to be spared.
There is no guarantee, though, that anyone will be spared, so if people haven't yet experienced job loss, bankruptcy, and/or home foreclosure, perhaps they should begin now to take steps to get out of debt and begin saving for a rainy day — just in case.
Of course, many people have intended to begin spending less and saving more but have procrastinated because, after years of excessive consumerism, they don’t know how or where to begin to spend less or to save money. It really isn’t that difficult, however, to curtail unnecessary expenditures, not if people learn the differenve between needs and wants.
Why People Accumulate Too Much Debt
Many people have become accustomed to fulfilling their every want and doing so instantly. For example, if they want a bigger, wider flat-screen TV, they hop into the car, take a drive to the nearest electronics store, and purchase that TV. So what if they don’t have the cash? Not to worry, they do have charge cards, after all; and that piece of plastic allows for instant gratification. Yes, the bill will eventually arrive in the mail, with a hefty interest rate tacked on to the purchase price of the TV they just had to have, but that’s tomorrow and today is today, right, so why worry?
Consumers should worry, however, because the first step in getting out of debt and saving money is learning to differentiate between their needs and their wants:
- A “want” is something desired solely for personal gratification, for example, a new TV when there's nothing at all wrong with the old TV.
- A “need ” is something necessary for survival, for example, food, housing, water, and medical care. And those needs should take precedence over wants.
Granted, according to Abraham Maslow, people also need security and stability, love and belonging, esteem, and, eventually, self-actualization; but for basic survival, people need only a roof over their heads, food on the table, and necessary healthcare.
Save Money by Prioritizing Purchases
When prioritized, items are listed in order of importance. Therefore, when it comes to where their money goes, people must decide which expenses are necessary, which can be delayed, and which, if any, can be dismissed entirely. In other words, they should ask, “Which expenses are for needs?”
Examples of Needs versus Wants
Needs:
- Mortgage or rent
- Utilities (electricity, water, gas, telephone, sewage, garbage pickup)
- Food (Groceries, not restaurant fare)
- Medical care (including prescriptions, eyeglasses, hearing aids, etc)
- Dental care
- Gasoline (for your vehicle)
- Non-foodstuffs (laundry detergent, housecleaning supplies, bathroom tissue, toothpaste, shampoo, etc.)
Notice that clothing is not included under “needs” because most people spend too much on clothing but not out of necessity. They do not need the latest designer fashions. They do not need the most expensive pair of running shoes. They do not need a new outfit for every special occasion. They do not need a new wardrobe when the season changes. They want these things.
Wants:
- Latest designer fashions (including shoes)
- Latest electronic gadgets
- Dining out (take your lunch to work and eat dinner at home)
- Going to the movies (rent a DVD instead)
- Non-foodstuffs (dryer sheets, air fresheners, scented candles, etc.)
- Premium Cable Package (settle for basic cable)
- High-speed Internet Service (Unless you are professionally dependent upon the Internet, cancel your subscription)
- Cell-phone with text messaging, Internet, camera, etc (all you need is a telephone)
- Lawn service (cut your own grass)
- Housecleaning service (clean your own house)
- Cologne and perfume (settle for the scent of soap)
The above two lists are merely for demonstration purposes, and needs versus wants can vary depending upon an individual's circumstances. People must, however, be able to recognize the difference between necessary and unnecessary and foolish and wise expenditures.
Other Money-Saving Ideas for Getting Out of Debt
Besides prioritizing expenses, people can take other steps to help them get out of debt and remain that way. For one, they can avoid using credit cards. Granted, in the event of an emergency, they may have no other option than to whip out the plastic; but unless it is a genuine emergency, people should avoid the temptation and do without.
Recognizing the difference between needs and wants is the only way people are going to be able trim expenses and, ultimately, get out of debt, as well as save money for a rainy day; and given the uncertainty of these economic times, that day may arrive far sooner than many people think.
Readers who found this article helpful might also enjoy "How to Lower Power Bills in the Home."
Carol Rzadkiewicz - Carol Rzadkiewicz has taught college English for over 14 years and is the author of three published novels and numerous short stories.
