9 Steps to Early Retirement

6) Needs vs. Wants

Along with learning how to live frugally and not spending money on big purchase items that don’t pay you back, you will also need to learn the difference between needs and wants. As children you may have been taught that a candy bar or an ice cream cone is a want while a need may have been electricity, dinner and a roof over your heads.

The same resonates as an adult. You need to figure out what your needs are and separate them from what your wants are. Needs must be paid for first, and wants should be addressed with a modest budget, or reduced and eliminated as much as possible. Before you spend anything, simply ask yourself if the item in question is a need or a want.

The more you begin thinking this way, the more money you will be able to put aside for later. The theme continues….save now, spend later.