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| There is a definite difference between needs and wants |
Anytime I ask a toy collector or cosplayer what holds them back from achieving their collecting or costuming goals, the answer is always...money.
Some are responsible adults and pay all of their bills and look at their hobbies as wants, working on their costumes and purchasing toys only after they put food on the table. Others, look at toys and costumes as needs and make those purchases first,
to ultimately end up short on their rent or car payment. Some people just don't see the difference between a need and a want. If that's you, let's take a look at how to find a way to satisfy both.
What Is A Goal
A goal is an achievement you consider important enough to work for. Owning a complete run of Kenner vintage Star Wars action figures, career, spiritual, educational, and health goals are just a few of many that might be important to you, But no matter what your personal goals are, chances are it'll cost you money to reach them. So you need to set financial goals to reach your personal ones.
I am going to ask you to write down your goals. I am also going to ask you to sort your goals by wants and needs and by whether they're short , intermediate, or long term. Why do this? Because it will help you set priorities. You see, once you figure out how much it will cost to reach your goals, which I'll show how to do shortly, you'll probably find that you can't afford them all. At least not right now. That's why you need to identify which are most important and which you want--or need--to reach first.
Wants and Needs
Wants are goals you'd like to meet, but even though only a Sith deals in absolutes, they are not absolutely necessary to your health and well being. Only you can decide what's a need and what's a want. For some people, a mint in box removable cowl Mego Batman is a want. A vintage Kenner Yak Face is a want. So is buying a home or funding a college education. For others, those goals may be needs.
Unlike wants, needs are necessary to your financial or physical well being. Insurance to protect your property, your income, your savings, and your family is one example of a need. Savings to cover a financial emergency---most experts suggest you put aside at least six to nine months salary in liquid investments for this purpose---is another. Paying off your debts---especially credit cards---is yet another need, because finance charges can cost you 15 to 20 percent or more over the original price tag of your purchase! And enough money for your retirement is also a need.
Time to Reach Your Goals
Some wants are short term---like going out to dinner tonight. And some are intermediate-term---like going to Star Wars Celebration 2019, wherever it may be that year. Similarly, some needs are short term---like paying rent and car insurance, and buying food and clothes for work. Some needs are intermediate term---like building a savings fund. And some are needs, like looking forward to a secure retirement, are long term.
Here are some guidelines for sorting your goals based on time:
- Short term goals are those you'd like to accomplish over the next year or so.
- Intermediate term goals are those you want to achieve over the next two to five years.
- Long term goals are those you'd expect to take more than five years to reach.
Below are instructions for setting your goals, assign priorities to them, and figure out how much you need to save each month to reach them. To see how I set and estimate the cost of my goals, Make 7 columns on piece of paper, spreadsheet, or whatever works best for you and follow the 7 easy steps below:
- Write down your goals in Column 1, sorting them by time (short term, intermediate, and long term). Note that the most common intermediate and long term goals--a car, a home, a college education, and a secure retirement---should be included. If these don't apply to you (other than retirement, which is a need for everyone), simply leave them off, and add others that do apply.
- Note whether your goal is a need or a want in column 2. This may help you determine the priority, or order of importance, of each goal to you.
- In column 3, number your goals in order of importance. Remember your priorities may need to change when you learn the cost of your goals.
- In Column 4, write the number of months in which you'd like to accomplish the goal. For example, if you want to save enough for the down payment on a car in three years, write "36 months" in this column.
- For your short and intermediate term goals, add any estimate costs in today's dollars in Column 5. (For goals you want to reach in less than five years, you can disregard the effects of inflation and any interest your savings might earn.) If you don't already know the cost to reach your other goals, shop around! Look into discount "price clubs," discount stores, etc. You can use "ballpark" figures for planning purposes.
- For your short and intermediate term goals, figure out the amount you need to save each month to reach each goal by dividing the amount in Column 5 by the amount in Column 4. Enter this amount in Column 6.
- For long term goals (those you want to reach in more than five years), it's impossible to precisely predict the effects of inflation or interest, so be sure to review your estimates fro long term goals every three to five years.
When setting your goals, you may find it difficult to decide which are important to you. If so, you are not alone. Many people have trouble choosing between spending for what they want and what they need. How do you start making choices? One of the keys to financial planning is realizing that---unless you're very wealthy--you can't have everything you want. You need to make choices by setting priorities and making compromises. In other words, follow the process above and figure out the goals that are most important to you, and put those that are less important aside for the time being. Be sure to plan your actions and choices so you're in control. Otherwise, you risk letting circumstances control you.
About the author: John Sholtz is an avid toy collector and the interim editor of the Batcave Toy Room due to the abrupt death of Bruce Wayne. Learn more about him here and connect with him on Twitter at, Facebook, Google+ and LinkedIn.
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