I had a conversation with a friend about wanting vs. needing a couple months ago. She expressed to me that she used to and possibly still struggles with figuring out what she really wants and really needs. I think this is a critical concept that many people struggle with. Despite the fact that everyone lives a different lifestyle and is accustomed to different luxuries in their lives, everyone needs to examine their spending for what is really necessary.
I think if we are able to determine what we really need and eliminate spending on the things that we only want, we can really improve our financial position. Indulging once in a while is perfectly normal, consistently living in a manner that is beyond our means or necessity, is just financially reckless. However, if we keep giving in to our many “wants,” we will never stop wanting. There will always be something else that we want.

Not only is it important to live within your means, it is also important to maintain a reasonable lifestyle with consistent spending habits. Just because you receive a big raise or a big bonus (these don’t really exist anymore) does not mean you should change your lifestyle or the way your spend money. At the beginning of the recent economic downturn, I read a few articles about how people who worked on Wall Street lost their jobs. There was one particular article describing a man who got laid off and was on the verge of losing his apartment in NYC that he bought a few years ago for millions of dollars. His salary at his job was well above $200K with the potential for large bonuses. Honestly, I didn’t feel badly for this man. He lived an extravagant lifestyle and spent much of his salary of things he didn’t need. He purchased an apartment that was too expensive and more extravagant than he really needed. NYC might be an expensive city to live in, but anyone with a salary that high could be very well off financially if he were smart with his money.

There is nothing wrong with the occasional purchase. I am against consistently purchasing things that we want, but don’t necessarily need.