Necessities vs. Luxuries

The only way to manage your expenses is to realize what are necessities and what are luxuries. For necessities, all you need is shelter, food, clothes, and some bathroom products.

Shelter means a roof over your head in a safe neighborhood, not a nice condo in a nice area next to your work. Food can be as minimal as rice, beans, some fruits and veggies, and the occasional meat. Clothes means a couple of outfits for work and something to keep you decent in other times. And, bathroom products are your basic shampoo, soap, toothpaste, etc.

If you are spending money on anything else, you are spending money on a luxury. I'm not saying that you should never buy clothes again or eat rice everyday. What I am saying is that if you are in credit card debt, cannot understand how you could possibly squeeze any money from your budget for retirement, or are living paycheck-to-paycheck and are spending money on luxuries, then you have no excuses as you are able to make a change and be able to save up an emergency fund, funds for retirement, and finally money for something fun.

Everyone gives excuses as to why they are buying 'luxuries' and why they are 'necessities.' I've said that the reason why I pay for a downtown apartment is because having a car would be more expensive. However, I've lived in the suburbs before and have taken a bus. I just don't want to get back on the bus even though I would save hundreds of dollars a months.

I've heard people say that they use coupons and, therefore, the ready made food is cheaper. However, unless you are like the people on Extreme Couponing, you are probably still paying more. The way to know is to see what is the average price per pound for veggies, rice, meat, etc. I've found that using $1/lbs of food is pretty accurate if you stay to the meat on sale, whole chickens, and chicken drumsticks. Therefore, if a 16oz package of a ready made meal costs $2, I know I'm paying double for the convenience.

For clothes, people use the excuse of their work to shop. However, after you have a few work outfits, you really don't need many more. See if you can remember when your coworkers wore the same thing as they are wearing today. Most likely, you will not be able to answer that question or guess if they own 5 shirts or 20. If you can't remember their wardrobe, most likely they can't remember yours either.

Bathroom products can be expensive, however, if they are bought on sale, they can cost next to nothing. The trick is not to be brand specific, which is a downfall of many. Try out the shampoo on sale and you will most likely not notice the difference.

Just remember to ask yourself next time you shop if you are buying a luxury or a necessity.