One of the fundamentals of setting up a tighter budget often oscillates around the conversation of separating wants from needs. When money is tight, we tend to think that we can start to eliminate the luxuries, or the ‘wants’, from our spending and focus on the necessities, or the ‘needs’.
However, according to Sarah Newcomb, PhD, this may not be the most helpful way to approach this task of pulling in the purse strings. She believes that we’re conditioning ourselves to go without things that make our lives more comfortable, enjoyable, and meaningful. Essentially, our wants and wishes are really needs as well. And if we start treating them as such, we’re all going to start getting more from our money.
“When we learn to budget, we’re taught that you need to know the difference between a want and a need,” Newcomb says. “And the problem that I have with that is the assumption that if you don’t need it to survive, you don’t need it. But it’s not Maslow’s hierarchy of wants; it’s Maslow’s hierarchy of needs.”
Newcomb goes on to say: “Anyone who fasts for religious reasons is putting their need for meaning and for spiritual connection above their need for food, at least temporarily. Anybody who texts while driving is putting their need for connection and communication above their safety. We’re constantly flipping the hierarchy on its head. And what this idea of knowing the difference between a want and need teaches people to do is to devalue the needs that are actually the most important to us. Yes, we need to survive, but without meaning and love and connection, do you want to survive? No. Those are the things that we survive for. So, to say that we don’t need those things is to really create a plan for feeling deprived.”
At SFP, we firmly believe that the way we budget and plan needs to help us tell our story and leave a legacy; it’s not just about being as frugal as possible.
Instead, Newcomb believes that once we accept that all of our needs are important, we can start moving away from a scarcity mindset and use our money in more fulfilling ways. “Every financial strategy attempts to meet a fundamental human need,” she says. “But you look underneath the strategy to find the need.”
Newcomb says, “If you do take the traditional route and just cut the thing off, say I can’t afford it; you will feel deprived because what you’ve done is you’ve decided that whatever needs you’re meeting, you’re just not going to do that anymore. And that’s why we all hate budgeting and that’s why we never keep our budgets. The goal is to be able to manage your money in a way that you feel amazing now and later.”
We have found that how we feel about our money is far more important than what we actually do with our money. We will not see any change in our money behaviours if we keep making ourselves wrong until we hope to get it right. We need to change the way we feel so that we start to change the way we behave, and that is when we begin a healthier journey with our wealth.