Going Beyond Differentiating Wants and Needs Can Help Build Wealth

Differentiating wants and needs is really easy. Needs are something we must have to survive (food and shelter aren’t exceptions to that rule). Wants are something we’d like to have but aren’t really needed (like those glitter or rhinestone-crusted heels for you ladies or that luxury car).

But being frugal and building wealth takes much, much more than that.

There’s a huge reason why post people turn from middle class to dirt poor in a matter of seconds. Don’t just blame government. Don’t just blame their workplaces downsizing staff to save money. Tell them to blame themselves.

Our society is a want-focused society. We need basic things that we must survive, but there are wants that are fancier versions of needs. Take clothing, for instance. We have to wear some sort of top to keep modest, warm, and/or presentable, and simply a T-shirt would do. But a top with all the bells and whistles (like a camisole with studs and rhinestones) is something we can do without.

What’s even worse is that it’s not even news to us.

Back in the 90’s, lines of stationary, binders, and smarm that girls would buy designed by commercial artist Lisa Frank (that’s right, Lisa Frank) were popular. Consumers would bring their trapper keepers, pencils, and notebooks from the line to school. You may be asking what were the teachers thinking when they saw them.

Sure, we all know school supplies are needs – we’d fail our classes if they weren’t for pencils, backpacks, and paper, right? But Frank turned them into wants. Girls whose families often had low incomes or good incomes but tight-ape budgets begged parents to buy them, even though they refused.

Photo by Enokson

Other needs that became their counterparts in wants in history were pens. We all need something to write with to prove the teachers we needed something, remind people about important dates, and express how we feel daily in journals. No longer were they just red, blue, or black, but in the early 2000’s gel pens were hits with schoolchildren.

Gel pens were problematic those days. A lot of the then-popular ones have colorful ink that makes writing illegible, even if the students had good penmanship. Try writing an essay in bright blue or apple green. You’d likely have to retake the whole class!

But illegible writing was only the tip of the iceberg. Kids with low income or tight budget-families were less likely to purchase the colorful pens than those who are more affluent. They’d wish that they had large collections of those motley pens, but their parents were probably too busy saving the money they would have bought with them for college or bills. (Actually, that was a good thing, for they were gradually getting wealthy even if their kids missed the gel-pen bandwagon.)

Youth fads in your children’s schools – unless you homeschool them or have them go to schools that are really strict on supplies and fashions – are things that would make you understand wants and needs. Most children of tightwad parents often are envious of what their richer peers buy or use. That’s why schools consider or enforce uniform dress codes or something similar to that. That’s also why they hand out school supply lists that list the same materials needed for each child.

And perhaps you should really set your own standard when it comes to going from want-focused to need-focused.

You really want that designer dress right now, but you have debt to pay. Well, wait a few days and think it over and ask if that’s necessary. If it’s right for you, use EFT (Emotional Freedom Technique) for that amount of time. Tap on the impulse to buy it, tap on what would you do to curtail that enthusiasm and focus on the needs, and tap on choosing to do so.

Alternatively, buy a dress from the thrift store and a few notions from the craft store and make your own designer outfit.

I know it sounds really childish, but make three piggy banks. One would be for savings, one would be for small purchases (like that dress), and one would be for a big (long term) purchase like an anniversary vacation. If desired, you can make another for donations for charity.

There are so many things you really want in the world, but though you can’t get them all, at least be thankful. Focusing on what really matters – your needs – really helps you to build wealth and get richer – at least in mind.

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What If “Rich” People Live Below their Means?

What if rich people live below their means?

Would they still live in a McMansion and have a lot of money and savings left over? Would they still eat out at the swankiest restaurants in town and be debt-free? Would they still take vacations at some private tropical island and not face foreclosure?

The answer to all the above questions would be a resounding yes.

All too often, the rich and grand are associated with huge mansions, fine caviar, yachts that would rather be miniature cruise lines, and private jets. All too often.

And didn’t I mention huge mansions? (photo by Allan Lee)

You’d think that they’d dine on their gold-gilded ice cream sundaes instead of store-brand ice pops. You think that they’d go to faraway lands instead of their attractions in their own areas, cities, or hometowns. You think that they’d drink fancy wine instead of water mixed with powdered drink mix.

True and not true.

Why are parts of the statements made on those making 6 to 10-figure incomes false (especially with those gradually getting wealthy or had done that)? Well, that’s because most of those people are actually careful on spending. I know what you’re really thinking. Those who’d spend lavishly would not spend something as silly and mundane as buying a home that would be for “normal” people like so many of us instead of a house with a huge pool.

Not all people with high incomes own watercraft like this. (photo by Maxine Simpson)

It’s really possible to have millions or even billions of dollars and still shop at the thrift stores, buy a manageable house, and clip coupons. Such a frugal lifestyle is neither just for those trying to make ends meet nor those with good incomes but on shoestring budgets.

Take the people in the “super-wealthy” category in Florida, for instance. This state is a huge staycation destination. What I mean by that is that they don’t need to fly to the beach or drive a thousand miles to what’s there in it.

Some people of the type live at most 100 miles from Walt Disney World and the rest of the Orlando area. And some look for discounts on theme park tickets and other attractions (Yes, even here in the state of popular theme parks we have free travel destinations!) that would have cost them if they are not living frugally.

Who says that the rich and famous can’t use coupons to save money? Well one celebrity did. She was born and raised poor, and though she was a “star” making a lot of money, she lived by discounts like most everyone else. She took her reusable bag to the supermarket, clipped dry cleaning coupons, and went to the stores on discount days.

Even billionaires live like us. One of them lived in a modest home in the Midwest. When it was bought, it didn’t cost millions. Amazing.

Still don’t believe me? Here’s a scenario.

Pretend that you are moving to New Jersey and you have at least $5-$10 million dollars on hand. You choose to live in something simpler like an apartment or 2-bedroom house. (No – I don’t mean luxury condos or penthouses.)

When moved in (and after you sold some of your stuff in a garage sale, of which you allocated most of the revenue to savings), you live a live that ordinary, money-wise people do. New Jersey is very notorious for high taxes, tolls, and living costs, but as long as you keep that lifestyle up, you’re more than financially OK!

So there you have it. Even if you are earning ten thousands, hundred thousands, millions, or even billions a year, you can still manage your money and be wise about spending. Despite the myths made on the highest earners, it’s really not that  unusual for them to spend wisely!

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What Gradually Getting Wealthy Isn’t

When you think of gradually getting wealthy, a lot of things come to most minds of people. There’s the impatience of waiting decades to become a millionaire. They hate the idea of waiting until they get a lot of money. They feel that it’s a deterrent to getting a lot of it in the first place.

Well, here’s what it isn’t: getting rich quickly.

You know what I mean, and the lottery is an example of this. It’s so alluring to win at least a high 9-figure amount of prize money. You know what you’ll do with it – give huge sums to charity, take extravagant vacations, and purchase a mansion.

Well, there are some circumstances in which people are not careful with what they won. When people don’t do wise things with it, like putting some in a trust fund and keeping mum about it, long-lost relatives and friends would come out of the woodwork to beg you for the money. You’ll realize that your funds would dry up either by extravagant living, more gambling, more destructive habits, or a combination.

There are some cases of lotto winners who were killed themselves or had family members die. Some more are facing lawsuits or joining the ranks of the working poor. One New Jerseyan won the state lotto twice in the mid-80’s, but due to extravagant spending and old folks who emerged out of the woodwork to get her winnings, she became poor again.

Also, building wealth isn’t about falling into get rich quick schemes either. There are tons of software programs that promises automated recruits if you have started your business, income if you hate working so much, and so on. But it’s really a waste of money because you are paying for something that promises quick cash but actually sets you up for failure. Entrepreneur Ian Chebe says it best: “Get rich quick schemes are usually get broke quick schemes.”

Photo by Thomas Blanton

Let’s face it – neither all of us work as CEO’s who get paid a lot, movie stars who receive large sums of money, nor top-cat bankers, just to name a few high-paying occupations. Most of us work as retail store associates, fast food cooks, waiters, waitresses, and other jobs that pay enough for us to just get on by.

You may be asking, “Well, how the heck to I build wealth even if my job doesn’t pay that much? How the heck can I accumulate enough money in that position? Even with that job, how can I achieve having a lot of money so I can live without debt and survive?”

That’s what gradually getting wealthy is all about. It’s about setting aside money and watching it grow. Also, it means doing so, saving it, and spending it wisely.

Does that mean getting lots of money to live like a millionaire over time? You know, having a private jet/yacht, a mansion, lots of expensive jewelry, and/or luxury cars? Of course not!

There are actually some people who make high six-figure-incomes or even millions and still live in modest homes and spend wisely. But their occupations are something akin to commoners, but they actually live below their own means to get that wealthy.

This is what it’s all about – saving money to have a lot of money. That’s money to comfortably pay off the debts and bills you have to pay. That’s money that you would put aside for your kids to get into college without facing the same debt problem as you did when you attended it. That’s money to have a happy retirement.

The list really goes on and on, but that’s the essence of slow wealth-building.

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