Want Versus Need
Warren Buffet, the famous for-being-super-rich American investor, has a net worth of US$71.8 billion as of July 2020, making him the fourth-wealthiest person in the world. One would imagine that he would live an ostentatious lifestyle. But you’d be wrong. The businessman still lives in the first house that he bought in 1958. Why? Because he says, he doesn’t need anything more. The five-bed, 2,5 bathroom house is perfect for the needs of his family. Did you notice that we used the word “need” a lot?
It’s an important nuance when you make financial decisions. Do you need those shoes? Or do you want them? Our advice? Master the art of being clear on your “needs” versus your “wants”. “Wants” are often unnecessary, impulsive purchases that satisfy a short-term desire. Needs are usually essential. You need to put petrol in your car; you don’t need to buy another pair of earrings. You need to pay for electricity. You need to pay for school fees. Make a list of your needs and make paying for them your number one priority. And, then occasionally allow yourself the odd “want” when you deserve a spoil. This approach also allows you to save for the “want” item, so it doesn’t put you in debt and keeps you in the black.
Beware the Bargain
Be honest. We’ve all succumbed to a good BOGOF (buy-one-get-one-free) deal in the past. Sales, deals and discounts are incredibly tempting. It seems like such good value. “But it’s a (insert famous designer’s name here) coat” you may say. However, deals and discounts are usually used by retailers to clear out old stock. When it comes to fashion, the clothes on sale may be a trend that is on its way out. When you’re buying food, you may get a good deal, but the goods may be close to its expiry date. Sales are designed to make you overspend, and often on items, you don’t need.
Retailers take advantage of the fact that we are all the same – we hate missing out on something – even if it’s meaningless and not valuable. Don’t get us wrong; there are good deals out there. We’re just asking you to do your homework and decide whether it’s another nice-to-have or something essential before you purchase. Wealthy people typically carefully choose and invest in items that will serve their needs over a long period. They don’t fall prey to the “discount” trap.
Don’t Try And Impress Other People
We’re always astonished at how casual most incredibly rich people are. They generally don’t care for the opinions of other people. They seldom spend money on trying to impress their friends. A guy like Bill Gates could spend his life trying to look like Brad Pitt, but he doesn’t. Spend your money on taking care of yourself, your goals and your financial future. Don’t listen to the people who may tease you because your takkies are old or you don’t drive the latest Mercedes. You have a plan, and you’re taking care of business. There is no need to waste money on trying to please or impress others. You know who you are.
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