Monday, February 24, 2014

Prioritizing Needs vs. Wants

I no longer need or want a dryer.

We need air, shelter, water, and food (in that order).

Survival rule of threes: You can survive for three minutes without air; three hours without shelter; three days without water; and three weeks without food.

Absolutely everything else is a want.

When it comes to my personal finances. I need emergency reserves.

Everything else is a want.

It’s so easy to get distracted by our wants because there are so many of them and they are so easy to fulfill. I want a new pair of shoes, the store is just down the street, and they’re only $50, done. The problem is that those shoes aren’t going to do anything for me in the long-run.

My favorite financial want vs. need dilemma was when my husband and I moved into our new house and there was no washer or dryer and our emergency reserves were just under my comfort zone. We went to the laundry mat for a month before a friend gave us a free washer because they had just upgraded. Then I wanted a dryer, but my reserves were my primary concern, so we started hang drying our clothes because it was summer and 100 degrees outside. Months later, I no longer wanted a dryer. It turns out that I like hanging my laundry to dry—it’s good for my clothes, the environment, and my pocketbook.

Designating my emergency reserves as my financial priority helps me put my life into perspective and I haven’t even gotten to the amazing emotional rewards.

My emergency reserves provide me with a sense of freedom. When shit hits the fan, I’m prepared. Just want to emphasize that I just used “when” not “if” because no matter what, shit will hit the fan. That’s life. And it’s not just when there’s an unexpected home repair, it’s also when I want to make a life change.

My emergency reserves provides me with choices. The choice to live my life as I see fit. This does not mean to buy the things that I hope will make my life better. I’m talking about the freedom to change careers, travel the world, or even start working as a consultant.

The absolute best part about having emergency reserves is not worrying. When I have less than three months of reserves, I’m constantly stressed that something will pop up, because expenses are always popping up. When I have six-months socked away, I can focus my energy on the important things in life, because I’m not constantly worried about my emergency reserves.  

What's your financial priority? 

-Leah Schonlank

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