Sunday, November 25, 2018

Wants and Needs....and Kids

This isn't really a tax post, but something that comes up a lot when talking taxes. The impetus of this was a Facebook post saying: I'm stuck between "I Need to Save Money" and "You Only Live Once".  I told them that I had figured out the secret in my twenties. When asked, I told them, "Don't Have Kids" (with a winky emoji, of course). But it highlights an important point to be made:

How to prioritize spending is the most important question most people struggle with when it comes to finances. Here's the less smart-ass answer:

The real trick is actually separating wants from needs, paying for needs and then prioritizing wants. Most "needs" are actually wants. Kids skew this because it's much easier to identify a want as a need with kids. Parents spend too much on toys, clothes, cars, and supplies because their kids "need" them and they would be a horrible parent if they didn't give their kids everything they needed. Being tough, and separating what kids truly need from what they want, and then prioritizing the kid's wants among all your other wants is critical. This doesn't mean the kids only get what they need, it just means their wants go in the bag with all the rest of the wants and get taken care of at a proper priority. The brand new, fully loaded, "safe" SUV is the poster child for this.

Nowadays, vacations are my biggest want. Every other want gets measured against the vacation that would need to be sacrificed for it. Needless to say I'm not getting that new kitchen anytime soon...

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