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Nathan's monthly newsletter is designed to help you think, talk and teach about money using the Share Save Spend philosophy. Printing and posting the column in a visible place like the refrigerator door, office or classroom can be a great way to stimulate money conversations with your family and friends.
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| To Need or To Want: That is the Question |
When the last time you stopped was and asked yourself, ‘Do I really need it or is it just a want?’
Regardless of age, that simple question is now foremost on millions of American’s minds. What a difference a year makes, especially in how we make spending decisions. Even though April is national Financial Literacy month and one might expect to see more articles addressing this topic, there is something more significant underway. We are experiencing a renaissance of new money habits and that is a great thing.
Wherever I travel for work the conversation inevitably turns to this issue. In short, people are telling me two things. One, they want guidance on how to shift their money behavior to match the current reality. Two, that it’s much more difficult than they thought.
A CPA friend of mine who is a non-family member executive for a successful family business sent me an email the other day that illustrates how challenging it can be to adapt to the “new normal”.
Nathan – I’ve been meaning to share this with you for a while as I really need your guidance on the issue of budgeting. Bottom line, I don’t think any of the family (or me for that matter) has a good process for how to budget.
Based on my education and profession I cannot believe I am saying that but all of us have been in a position where our income has grown steadily for 15 years and for the most part our spending has lagged slightly behind. But now all of us have seen our income either level off or go down.
The challenge is that when I look at my own spending there are so many categories that it seems overwhelming on where/how to start. One of the major obstacles for getting this under control is a category I call fixed assets. For example one of the family members has a boat and I have a camper. The only real way to make major decreases in spending is to sell such items but none of us want to give up these luxuries.
It is one thing to use a financial program to manage monthly expenses, yet it is a whole other animal to use the information to reduce or control spending. I fear the family’s lack of practice in budgeting will prevent us from making the necessary adjustments – especially as we try to help the next generation develop healthy money habits. Help!
One Share Save Spend Idea:
Like many folks, my friend is now recognizing how challenging it is to get expenses in line with the current financial reality. At the core it is about needs and wants. Follow these steps to get your head around the issue:
1. Track all expenses for 30 days so you can get a clear picture of where you stand
2. Write down your definition for a need and a want
3. At the end of 30 days, mark each spending decision as either a need or a want
4. Prioritize all the wants categories (from most important to least important)
5. Decide which items on the wants list will be modified, deferred or dropped based on your current cash flow.
If you have a spouse or significant other do the exercise separately and then compare your lists as each person will bring their own perspective, priorities, and values to the process.
Money Talks: One question for teaching about money
Whom do you know that has mastered the art of discerning needs from wants?
Gotta Have It Now WOW!
More than $35 million in merchandise is stolen each day nationwide and about one in 11 people in America have shoplifted.
Source: National Association for Shoplifting Prevention.
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