I used to subscribe to a local newspaper for about $45 a month and they delivered the daily newspaper to my door. After a little more than a year, I realized that I can get most of the same news on their website for free. So beside the paper ads stuffs within the newspaper, there’s nothing else that I couldn’t get for free. And even worse, those ads gave me not much values. Yeah it’s nice to know there’s a sales at Sears or price-cut at Honda car dealer, but I don’t need anything there. So that was when I canceled my subscription and go online for free information.
Many people still consider subscriptions to newspapers or magazines are their necessities. I find it hard to justify such spending. But that doesn’t mean I’m right about whether it’s considered a necessity. Let’s look at another example, NetFlix movie rental. Most people agree that unless you really enjoy a trip to BlockBusters, NetFlix would be the best choice in both convenience and price. Since I watch in average three movies a month, it’s the best option I have to pick my favorite movies. Yet I talked with my friend the other day, she disagreed with me that NetFlix subscription would be a necessity. She subscribes to the lowest cost cable package of about $14 a month that gives her the local channels and about 3 more national network channels. She argues that most movies eventually are shown on TV, so why spend money to rent? And whether you watch it now or later, you’re equally entertained!
It’s hard to argue with that, but I just realized that necessity is defined differently by different individuals. For a frenzy shopper, an 8th pair of shoes is definitely a necessity, while a frugal person would consider a 2nd pair a waste. For most things in daily life, it’s pretty much clear-cut to decide how important they’re, or how critical it is to live without. Yet for many other things, it’s not quite that simple. For example, life insurance. It’s obvious that a large portion of the population don’t have life insurance. So no matter how you put it, life insurance is considered by many as luxury rather than anything close to necessity. But theoretically it could be devastating to live without one. Every ordinary person cares about his or her family, especially young kids, and imagine what would happen to them if you passed away suddenly. So in theory, it is a necessity to carry a life insurance policy as a financial protection to your loved ones. But in reality, most people would prefer to gamble with probability rather than getting their peace of mind when it comes to life insurance.
With that in mind, you got to define your own concept of necessity. For myself, I define it as something that is very difficult to live without BUT still affordable. I add the second condition there to make sure that I don’t spend anything beyond my means. To further clarify the definition above, let’s pick an example. For all of us, our shelter is definitely a necessity. But it doesn’t mean you have to buy a home. You may instead just rent it at a price you can afford. When strictly applied, it means everyone should be able to afford necessities. Many people get into financial troubles mainly because they can’t define this concept. They spend more than what they make, building up sizeable debts until they go bankrupt. A practical understanding of necessity concept will certainly help improve one’s financial condition.
Living in modern society where we all are surrounded by advertising pressures, it’s difficult to practice budget control. Merchants always lure consumers into buying by offering discounts and promotions, or even free products. The result is that we consumers always end up wasting money for stuffs we, at some moment, believed to be necessities. Because the advertisers’ job is to seduce us to buy, perhaps our job must be to resist the temptation. So the next time you go shopping, keep in mind that everything should be assumed WASTE until proven NECESSITY.