Must haves versus wants

Need or want? Sometimes deciding which category something goes in is the hardest thing.

It’s a sad fact that the only way to save money is not to spend it. Take a look at your expenses to decide what should get your precious dollars.

Look at your house mortgage or rent expenditure

Do you need a palace or a home? Your house is your castle, but make sure you can afford it.

Palaces are great and one day I am going to build my own stick palace and invite lots of people to live with me. But realistically talking, when drawing up a budget allow no more than 25% of your net income for housing. Then see how much house you can buy/rent with that.

Many think they "must have" exactly the house they want. So they go and get the loan folks to get them into maximum payments, even using bonuses and overtime. Yet, when the economy starts turning in on itself, the first things to go are overtime and bonuses. Don’t overstretch yourself when it comes to housing!

Do you really need an extra bedroom or a three-car garage? Or would you be just as happy (and have less cleaning to do) in a smaller place? If you’re living in a big place, squeezing in flatmates or a boarder can save you heaps of cash.

When considering locations, don’t forget to factor in transport costs! Land is cheaper out in the country, but petrol is still the same price. Try and live close to big commitments – school, work, or family – and on a public transport route if possible. Even if it means a smaller or less-fancy home, you’ll save heaps in the long run, and spend less time commuting.

The not-so-little things

But I need this and that and these and those and much more. Have you heard this before? Stick people don't like that sort of thinking. Nowadays many luxuries are considered necessities.

Do you really 'need' a new car or you just want it? Driving an old banger which will cost you money every time it needs a warrant doesn’t make sense – but neither does driving the latest BMW. Look at your needs (how often you need to drive, how many passengers you need to carry), and pick a reliable car that meets your needs.

Sometimes a need can be met with something less expensive (do you really need a cell phone with all the tricks?). Re-evaluate your needs, and keep your electronic toys as long as possible: don’t upgrade just because something shiny and new has come out.

Before buying a new gadget you’ll only use occasionally, see if you can borrow it from friends or family first. You may decide you don’t need a new weed whacker/food processor/kayak after all – or if you can’t live without it, you’ll have a better idea what features you should look for when buying.

Just about every community has a library. Become a regular at yours. Library books are a whole lot cheaper than pay-TV, and better for your brain too. After your trip to the library, head to a local park or council-owned swimming pool for a cheap family day out.