Tuesday, November 1, 2011

The Golden Rule Part Two -Needs versus Wants

Further to the previous post, you may be wondering how you can possibly live on less than you do today. Well, the first step you must take is to make a list of all of your needed expenses.

This list could be lengthy given today's high expectation lifestyle. However, really think about what you need to survive. Food - we all need to eat to survive. Clothing - we all need to cover up and keep warm (besides most of us are not super models ) . Shelter - we all need a place to live and call home.

The above needs are traditionally the basics of life and survival. However, in today's global community, I would suggest that there is one more category that qualifies as a need. Communication - we all need to be connected to what is happening in the world in order to thrive financially. Whether this be through internet sites such as Facebook, Twitter, Linkedin,  or other means, communications is vital.

All other categories are considered wants and we can do without them and survive quite well. Of course, we all want to be entertained and pampered occasionally, but some restrictions in these areas would be your best starting point for finding the funds needed to pay yourself first.

For instance, eating out in restaurants is a want, not a need. We can eat at home for much less than dining out every day, etc. Designer clothing is also a want and not a need. Where you live can also be a want and not a need depending on your income level.

Whatever your situation, you should be able to free up 10% of your take home income and pay yourself first. Without this ability, it will be very difficult to get ahead financially and to some day become wealthy. This is where your future must start. Develop the good habit of paying yourself first no matter what happens.

Stay tuned for future posts on related topics. Please leave a comment if there is a particular topic you would like me to cover. I will do my best to include your requests in future posts.


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