Have You Tried the “Need, Want, Like” to Change Your Finances?

There is an essay on The Minimalist that just might be what you need to change your life.

Need, Want, Like

I heard this post on the podcast Optimal Finance Daily. You can listen to the episode here.

Need, Want, Like on Optimal Finance Daily

You put all your purchases into three categories.

Need / Want  / Like

Needs are the basic necessities like food, shelter, and  Starbucks  water.

Wants are things like new cars or nice clothes. Wants add a sense of value to your life. I want a nice reliable car that I’m not scared will break down while I’m driving down a busy road.

Likes are things that you think are nice, but you will not get much value from. I like eating at nice restaurants but I don’t draw very much value from this at all. For others, this may be a want.

Implementation

For the first month, remove all Likes.

Second month, remove all Wants.

Third month, reduce Needs to 50% or as much as possible.

After all this is done you can always add stuff back in (one at a time). I think what most people find is that a lot of wants were really likes. They would have never realized they didn’t bring much value until they were completely removed.

What you are left with, is more time and money to do the things you value most.

Too many people spend money they earned…to buy things they don’t want…to impress people that they don’t like.

-Will Rogers


My Personal Hack

I find this very helpful with an irregular income. Since income is different every month, it is difficult to budget for a certain number.

I base my budget on the worst possible scenario (needs only).  If the income is a bit higher, than I can move to the wants category.

Throughout the month, I will write down any wants I think of. At the end of the month, after the needs are taken care of, I will pick a few wants by order of importance. This really helps to weed out unnecessary purchases, since you are forced to compare all the items on the list.

For a much better description, go to the pros.They do a fantastic job of explaining this. (Obviously, they came up with it)

Need, Want, Like.

Or listen to it here.

Need, Want, Like on Optimal Finance Daily

Also you can watch them on The Minimalist documentary Minimalism.


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