Wednesday, January 22, 2014

Controlling wants

How many of us can clearly distinguish between a need and a want? 

There is a vast difference between a want and a need. Let me try to describe it. In layman's term, a need is without which we cannot live and a want is our own desire. However, people blindly interchange words and we hear sentences like:

  • I need a car because waiting at the bus stop is so boring
  • I need a plasma TV cos the old TV consumes lot of space
  • I need a bigger car since I am due for promotion in next month
You got the crux, right? There could be many examples but examples are irrelevant as they belong to other people. Find your own examples and try to distinguish between a need and want among your examples. 

Nobody can distinguish between your want and need. Four wheeler could be a want for a college guy while it may be a need for a women staying in remote place with pathetic public transport. So the object does not matter, the reason for buying those objects will distinguish in most of the cases.
There are ways to control our wants. Some are easy to follow, some are not so simple. Let us see them below:

  • Defer your purchase. I 'needed' a pair of jeans and I 'wanted' another as a spare. I deferred buying till I understood that there is no need of a spare.
  • Discuss your plan with your family/spouse. Long back, I wanted to upgrade my vehicle from Scooty to Wego. Had a conversation with my family and understood that there were few more things to be bought before that upgrade.
  • Mathematics. Do the math yourself. Visit the site . There is a huge collection of calculators on this wonderful site. Do the calculations there. Example: if I take a loan of 'x' amount for car, with an EMI of 'y' and have retirement amount of 'z', will I be able to meet my long term goal? This exercise can be scary.
  • Invest money before you can touch it. Various books like Richest man of Babylon, Rich dad poor dad, Retire rich with 40 per day.. all will tell you to pay yourself first. Give SI/ECS to bank for auto-debit for some RDs, FDs, MFs or try auto sweep option as well.
  • Some experts suggests to open different accounts and earmark them as per your goals. Example: You would be tempted to make payment for Plasma TV from your SB account. However, you may not dare touch an account earmarked for your daughter/son's education.
  • Always try not to go for EMI option. This makes the things looks affordable
  • The golden and age old formula: Pay by cash and not by plastic card
Work out your own strategy or use above.

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