One of the great debates when discussing finances is how do we determine whether the item we’re considering is a need or a want?
This discussion has so many possible right answers because every situation is different. We have a unique level of income relative to our debt and expenses. Usually our income is a set amount each month. We allocate about the same amount to bills every month and we have a certain amount left over after the bills have been paid. Some have nothing left over, largely because of accumulated debt. In either situation, we need to decide how to spend on items that are in the grey area.
Do you really need that new widget? For example, many would have no issue saying their six year old, well maintained, dependable car “needs” to be replaced with a “new” car because it’s “old”. And we haven’t had a new car in years. Others would see the added expense of a new car as a definite “want” item.
Face it. If we asked what we NEED to spend money on each month, the list would be quite short. Basics like food, utility bills, house payments, insurance would all make the list. But what about the $425 on average that you spend each month on dinners out? Is that a need or a want? Can that be cut back to a modest $125 thus saving $300 per month? What about the amount spent on vacations each year? If you look back, do you spend a few hundred dollars per year or is it thousands?
How about new furniture? Do you regularly spend money to modernize the household furnishings like a new bigger and better TV, sofa, remodeled kitchen, new backyard furniture, new family room stereo equipment . This list can go on and on.
Each of you needs to determine what level of discretionary spending fits your budget. I believe that most WANT items should be OFF the list until ALL debt is paid off. Any money spent for “wanted” items could be used to pay down debt faster. We need to get in a position of being debt free. When you are debt free, then you can conscientiously decide what amount is “reasonable” to spend on items that are in the “want” category.
Discuss all of this with your spouse and come to a joint decision. Collaborate and be willing to compromise. You may not see the NEED for something that your spouse would really like to have. It’s OK to find a balance. But agree on this together.
You NEED to be in a place where you each WANT what is best for both of you.