Have you ever heard someone say how much they “need” something that is a complete waste of money? They need their gym membership, they need their SUV, they need their daily latte. We all know that it is a want, but it is an important psychological issue to understand.
My Friend with the Gym Memberships
I have a friend who came to me for financial advice. That happens regularly, so we went to lunch to discuss her situations. While eating sushi (she had more than $20 in sashimi, in case you were wondering), we discussed her “need” of a new Mercedes SUV and her four gym memberships.
Read that last sentence again. Take a minute to soak it up. Four. Gym. Memberships.
And she is convinced she needs them.
When discussing this, she explained that certain trainers only work at certain gyms. I said, okay, so just belong to that gym. The workout nut she is, she thinks she needs multiple trainers with different specialties and needs to belong to multiple gyms near work and home. That adds up quick.
The average gym in the Denver area costs $30-$40 per month. Paying for four of them costs $140 per month. That is $1,680 per year!
When people ask me how I can afford to do some of the things in my life, I tell them that I cut wasteful spending to focus the money on places I get more value. The first thing I mention is cable. I got rid of the cost (and hassles) of Comcast in February, 2011. I have saved $1,190 in that time.
When I tell people that I saved enough money cutting cable to buy a roundtrip flight to Europe, they say “I could never live without cable.”
I promise every single person, you will not die if you cancel cable TV. In the time since I got rid of cable, I have been more active and involved in more community and social activities. I didn’t die. I just saved a bunch of money.
I was talking to a different friend about her financial situation recently. Using Mint, we found that she spent over $200 every single month on clothes, usually closer to $300.
She said she “needs” those clothes for her job and social life. I know women’s fashion is much different than men’s, but I probably average closer to $30 per month on clothes. Even doubling that to $60, I am sure she would be just fine.
Evaluate Your Spending Habits
I know that I spend money on wants regularly, but I work hard to make sure I am not wasting money on stuff that doesn’t give me value. If you are doing well financially, saving over 10% of your income for retirement, and have no debt, no one should judge you for having four gym memberships. However, if you are on shaky financial ground, it is important to evaluate your spending to find places to save and divert your money to places where you get more value.
What places have you cut spending that was a “need” but you realized was a “want?” Where have you saved on spending to divert your money to more useful places? Please share in the comments.