Spendings. Desires. Needs.

Two of the essential conditions to achieve a certain goal are defined by discipline and awareness and both work very well together. A strict discipline formed step by step, with patience, leads to an awareness of all the things necessary for us to have a lifestyle that pleases us.

The purpose of the following lines is to make ourselves aware of the ways in which we spend our money and if they are in accordance with our final goal, set rationally, not emotionally.

Reason and emotions are the engines by which people act and, at the same time, they represent the difference between needs and desires, because the spending of any person is limited to these two characteristics. Need is given by reason, it is logical, but desire has its core in an emotion. In the long run, reason remains and the emotion disappears, but not the expense already made. That’s why we must distinguish what really represents a need and a desire. We certainly would not allow a person to control us as we allow impulses to do so, which is why we must not let ourselves be manipulated by the emotions that arise when it comes to spending our money. Warren Buffett emphasizes these aspects perfectly: “if you can’t control your emotions, you can’t control your money” and “buying things that aren’t necessary will lead to the sale of things that are truly needed.” We can draw a clear conclusion from the two statements, namely that the management and awareness of emotions are of key importance.

Firstly, it would be very helpful to take a paper and build two columns: the first column to contain your needs found so far and the second one to contain your wishes. Don’t read any further until you have the two columns completed, we’ll come back to them.

A golden rule that defines expenses can change our lives radically:


If we want to achieve a certain financial goal, all the things we do must be closely related to that objective and help us achieve it. In order to do that, we need to be aware of the situation we find ourselves in and our real needs. We need to know what revenue we have, how much we want to save, so that we know how much we can afford to spend. About investing, we will deal with this topic separately in the future.

Each person needs an approximate living budget and each person has certain monthly expenses depending on it. How many of these spendings are consistent with your financial objective?

I would like to give some examples of the expenses that people make, without all being aware of them. Everyone uses a mobile phone that costs from a few hundred dollars to more than a thousand. These amounts represent for us, maybe from a few days, to a few months of work. Is it worth paying with your time buying objects just to create a preconceived image in the eyes of the world? It is known that a part of our brain perceives status, being a necessity with which we are born. The thing we should do is apply reason when it comes to paying with time on objects that are not in line with our financial goals. Studies show that the enthusiasm given by the secretion of dopamine in the body, the moment we buy something we like, is from a few days, on a mobile phone, up to a maximum of 6 months, in the case of a house or car. Specifically, if we have purchased a car on a 5-year loan, after the first 6 months of the 60 months of credit, we no longer feel any contentment or satisfaction. I also gave the example with the car because in our current culture, “what others think” has a major influence – “what are my friends or neighbours going to say when they see me?”; what’s more, attention is lost on how we feel and what is truly defining for us and our families.

Please take a few moments and think about what you would do if you were here on Earth only you with the important ones and without having to “impress” anyone. How many of the material things you own would you buy again? Do this exercise of imagination and I’m sure your perspective will change drastically. If that’s not enough, I’ll give you another example. Let’s take the situation of a person who has a monthly income of about 3,500 RON (how much was the average net income for Romania in 2021). During the year, he saved a certain amount and at the end of the 12 months period he has in the savings account 3,500 RON, that is exactly the remuneration for a month of work. He will go and buy a phone with this sum and he will be happy because he has not work for nothing that year. My question is: did he paid with money or a month of his life (which he could spend it with his loved ones)? How much time would you pay?

How do we manage our spendings better?

It is proven that if your monthly income increases or decreases by up to 10%, your lifestyle does not change at all. To understand it better, I will refer to the experiment done by the American Airlines in 1987. It saved $40,000 by removing a single olive from the passenger’s food for a year. This amount coverts into about $98,000 at the moment; I don’t want to point out the decrease in the purchasing power of the currency, but the fact that an unnoticeable expense month by month, in the long run, can change your life. People tend to overestimate what they can do in a year and underestimate what they can do in 10-15 years.

A study conducted by the National Institute of Statistics in 2016 shows that Romanians spend over 85% of everything they earn. Therefore, it is clear that at least 10% of revenue is spent on things that are not really a need. Monitoring your expenses will help you figure out where your money is going, to have a clear record of it, so that, at the beginning of the month, you will be able to make an approximate calculation of future expenses and you will be able to save a predetermined amount. With clear evidence, you will see the progress and be motivated to continue to improve your financial situation month after month. In short, this discipline helps you being in control, to manage your money yourself and not the other way around; if at first it will be difficult and may seem to be useless, along the way you will see significant results.

We all know that the love for money is not beneficial and we must not make it an obsession, take everything to the extreme, because then money will control us. The key is balance, middle path being the best option. The record of expenses can be made with the help of an Excel document or/and with an application specially designed for this, such as: My Wallet, Cash Control, Money Manager, Mint, CashBase, etc.

Rule 7/14

To make smarter decisions when dealing with our own finances, it is recommended to pay attention to this simple principle. If you are considering spending a relatively small amount of money (up to 1,000 RON for example), take 7 days and think about if the money spent will satisfy your need; if the amount you should spend is higher, think for 14 days about whether this expense is really a necessity or not.

Existing ads are built specifically to awaken an emotion and make the consumers purchase things they don’t necessarily need. The application of the principle is useful because in this time dedicated to the analysis we can figure out if the money is spent on a real need or on a desire caused by a superficial emotion.

How are we influenced by our social circle?

This is a larger topic, which I would like to address in more depth, but now I will just highlight a few ideas related to Jim Rohn’s famous phrase: “you are the average of the 5 people you spend the most time with”. The famous statement is supported by a study made by a Harvard University professor named David McClelland, from which it results that the people you associate with determine up to 95% of your success or failure in life. What does this mean in the context of spending? Each person around us has a certain financial situation and a certain purpose. If the goals do not coincide with what we want to achieve, inevitably, in long term, we will act chaotically, we will spend uncontrollably, moving away from the much-desired objectives. Therefore, we must take care of the people around us because they can influence us involuntarily. Remember, when you buy someone’s opinion and “follow” their advice, you also buy their lifestyle.

In the end, I would like you to think about the real needs you have, never forget about the goal you set for yourself and always realize if your actions are accordingly to it.

Now, come back to those two columns of needs and desires, we spoke about earlier. If necessary, rewrite them and be as drastic as possible with yourself. From this moment on, every time you want to spend an amount of money, put it into one of the two categories and determine if it really represents a need or if it’s just a desire stimulated by an emotion. Adapt them periodically according to your ultimate goal and do not forget that always, less is more.

*If you have any suggestions or proposals related to new topics of discussion, write them in the comments and do not hesitate to tell us if the information you liked and was useful to you.

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