Focus on needs, not products

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One mistake I see people make a lot is to think of their money as a way to get particular products or services they want. I want to buy this particular television because it has the cool new feature thingy and I just can’t live without it. A very common mistake — one I make all too often myself.

Why is this a mistake? Isn’t it great to have a particular goal and to work towards it?

It certainly is great to have a particular goal, and sometimes focusing on that goal with a specific picture or product in your mind can help get you there. For instance, (Wesabe advisor) J.D. Roth has a great story about saving for a Mini Cooper that shows how this can work — in his case, spectacularly. The very first big purchase I made as a kid (a Vectrex game machine, for the record) worked the same way for me — keeping that thing in mind kept me saving.

But in many other cases, fixating on a particular product can bring out all of your worst financial habits. This is, in fact, exactly what marketing and product catalogs and television ads and promotions are all designed to do: to get you to want to spend more because you believe it will bring you something special. I was flipping through the Design Within Reach catalog today and saw a pair of water hose spray nozzles for $70.00. Wow, I thought, “Within Reach” of whom? Why would I ever need to spend $70.00 on spray nozzles, no matter how well-designed? The catalog told a story about elegance and efficiency and clean design, and by absorbing that story, one might be tempted to spend $70.00 on a product that sells for $5.00 at the local hardware store. (For the record, I was not tempted — in this case, at least.)

Some of your needs or wants will always have a newer, better-seeming product available. Shaving products are hilarious this way: since shaving is a pain and many people hate it, every year a new product comes out with more and more blades or lubricants or whatever else they can think to add. (Check out How Many Razor Blades Do I Really Need? for exhaustive research on this topic.) Each one costs more, and maybe each is a little better than the last. Should you just upgrade every year, and spend more and more and more shaving as time goes by?

A great way to budget is to flip around your way of thinking. If you fixate on a product, the only financial question is how to get the best price for that product. If you fixate on the need, instead, you can ask, what are the range of products available to meet this need? Would a low-end or mid-range purchase meet my needs in this case? If so, great! You just saved money, probably a lot more than you could save by shopping for the best price on a high-end purchase.

I saved a ton of money with this way of thinking when I went to buy a grill for our back yard. I started out fixating on a high-end Weber gas grill I had seen at a friend’s house — available on Amazon for a mere $700.00 (gas not included). Think how quickly I could be grilling! How much space I would have to grill! Maybe I could find a really good used one for $500.00, if I spent a bunch of time and got lucky. But then I stepped back and thought, what do I really need, here? I want to be able to cook over an open fire in the back yard. Do I really need that much space, or that much speed? I wound up buying the classic Weber “One-Touch” charcoal grill for $70.00 — a 90% savings. (Given how durable they are, I probably could have gotten one on Craig’s List for nearly nothing.) It’s perfectly good enough for my needs — any time I want to grill, an extra half hour heating the grill while I prep the ingredients is no big deal.

Buying a high-end product can be fun and can be rewarding and a motivational goal. Sometimes it can be worth it. Just don’t tell yourself it’s anything else, and try to make lust for a particular product be the exception, not the rule. If you focus on the needs you want to fulfill with your money, you’ll find you have a much wider range of choices, and much greater opportunities to save.

9 Responses to “Focus on needs, not products”

  1. Kelly Says:

    I think the struggle to know the difference between a well-marketed product and needs is one of the main reasons Americans have debt and spend so much.

    I have accepted that certain things like buying coffee from Starbucks or a café is more about the experience for me. I could save on making my own coffee at home, but sometime I want that experience. In fact I’d go as far to say that we occasionally NEED the experience of being out of the house, doing something to be well-rounded.

    Of course this goes for anything and everything we buy, and when you really pay attention to those choices it can be interesting to see how much you can save.

    Great post.

  2. Get Rich Slowly » Daily Links: Off to Orlando Edition Says:

    […] At the Wesabe blog, Marc Hedlund writes that you should focus on needs, not products. When we fixate on products, we ignore other cheaper solutions that might be available. […]

  3. Dee Says:

    Great post. I have a list of things that I think I will need to buy at some point, but now I am going to refocus and figure out what I hope to get out of those things and see if there’s another way (as close to free as possible) to achieve the same goal.

  4. Daily Links: Off to Orlando Edition | writteninfo.com Says:

    […] At the Wesabe blog, Marc Hedlund writes that you should focus on needs, not products. When we fixate on products, we ignore other cheaper solutions that might be available. […]

  5. Holiday Savings Ideas Says:

    […] Travel less this season Traveling at holiday time is expensive and stressful, and this holiday season is proving to be an absolute bear. The weather in the Northwest and the Northeast is causing huge delays at airports. Many airlines are letting you reschedule at no extra charge. Be sure to ask about these special offers and if you are able to cancel at no charge, even better. We hope you are not one of the thousands of stranded travelers at the airports but if you are, we wish you the best in getting where you want to go as soon as possible. Curb your spending! There are going to be some incredible bargains after the holidays. In order to keep myself away from the stores I say – “do I really need this?” And “do we have the room?” Most of the time it is a resounding no!  If you think your spending is not optimal, there are online tools you can use to do a better job of budgeting such as Mint and Wesabe. You can use their budgeting tools and discuss strategies with active online communities. It may be that you find out those extra take out meals or that additional night out at the movies and dinner is costing just a little too much at the current time and if you cut back, your savings could exceed more than $500 a year. […]

  6. Kodi Says:

    Understanding the differences between needs and wants is a key money saving skill. One of the biggest cash sinks is buying a car. Too many people are lured to the sweet smell of a new car. Yeah, a new car is typically more reliable than a used car, but if you buy a young car, say three years old, it’s likely to be in good shape and have taken the depreciation hit. This is high value, low cost situation somewhat like buying the used Weber grill.

    Buy smart!

  7. Racine Personal Injury Lawyer Says:

    All too often do we get caught up in the new features instead of the necessity. It's nice to have a reminder every now again. Great post.

  8. CPA Continuing Education Says:

    This is excellent advice. I really love travelling and you get attracted to these big offers at 5 star hotels and what not but then you figure that you don't really need it. I've started having more fun travelling after i started planning out the finances of my travels in order to fulfill the needs and have more to spare to travel and discover. It is so much more enjoyable to know that you are spending wisely.

  9. A coffee pot is not an "investment" « Wesabe: Your Money. Your Community. Says:

    […] pot is not an "investment" By Marc Hedlund Last week, I wrote a post called “Focus on needs, not products,” that talked about a way to save money by thinking differently: focus on what you need your […]

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