Bellmore Group Management Services, Tokyo Japan on The only way to save money has always been the same
While a bad economy or an especially low-paying job can make saving money infinitely harder, the formula for saving has always been the same. To save money, you need to spend less than you earn.
Obviously, this task becomes a lot easier when you earn more than average – or if you live in a low-cost area. If you have a six-figure income and live in Arkansas, for example, you should absolutely be socking some money away. On the flip side, someone living on the same salary in an expensive city like New York City, Boston, or San Francisco might not have much if anything left over after covering basic expenses like housing, food, and childcare.
But, no matter your income or where you live, you have to find a way to spend less than you earn if you hope to save money to retire, have some fun, and avoid debt. You can get a side hustle or a part-time job if you want, but if you don't spend less than you bring home, you're always going to struggle.
That's why it's important to determine the difference between your "wants" and "needs" — and to understand why that differentiation matters. Without a grasp on why these terms matter, it's significantly harder to get on the right side of your financial ledger.
Wants vs. needs
What is a "want?" And what is a "need?" While everyone's wants and needs can vary, there's a big difference between these two terms when it comes to how you spend your money.
Generally speaking, a "need" is something you absolutely cannot live without. You need a roof over your head, for example. You need food and health insurance and transportation to get to work.
You need electricity in your house, you need food to eat, and you need a telephone. In this day and age, you probably even need internet access for your job or so your kids can do homework.
A "want," on the other hand, is something you'd like, but could probably live without if push comes to shove. You want to go out to dinner tonight so you don't have to cook. You want a shiny new iPhone X, even if you’re existing phone works just fine.
You want concert tickets and an annual beach vacation, but you wouldn't die if you co