How many times have your children said, “I need this?”
Or how many times has your spouse said it? What about you? How many times have you said it?
At the risk of dragging out the old, “I had to walk to school uphill both ways in the snow,” argument, what Americans consider a need today is much different from the past.
In addition, Americans have created a culture in which the concept of “need” is much different from anywhere else in the world.
Enough about historical comparisons and international economics. Let’s look at a few examples of what Americans today consider needs and just how ridiculous (and expensive) they are. While we’re at it, let’s consider some common sense alternatives.
How You Can Spend Less on These ‘Needs’
The water that comes out of your faucet might have a slightly strange taste but the facts are that it’s still much better for you than water in countries around the world. The difference is that savvy marketing has convinced you that you need bottled water in a (possibly toxic) plastic bottle from a secret mountain spring in Washington.
According to the International Bottled Water Association, the average person drinks 167 bottles of water each year. That’s $225 per year. At an average cost of $1.35 per bottle, it would take 10 years of refilling a water bottle with tap water before you spent $1.35. One more fact: If your tap water cost the same as bottled water, your monthly water bill would be about $9,000. (Based on San Francisco water rates.)
If you can’t live without filtered water, the cost of a water-purifying pitcher is about $50 annually.
Something feels trendy about getting your daily dose of Starbucks. (As if the glorious taste isn’t enough.) Conservative numbers look like this. If you purchase one latte daily, that’s about $1,460 per year. Over 30 years, counting investment income you could have made if you saved that money, you would have an extra $239,891.
You’re probably not going every day but even half that amount is a lot of money.
Are you one of those that “have to have your caffeine to function?”
Maybe your expensive taste for hoity-toity coffee means that old school coffee maker on your kitchen counter needs an upgrade. Let’s get you a Keurig coffee maker and load you up with those little K-cups.
The machine will cost $58 and each K-cup, somewhere around 60 cents. If we divide the cost of the machine over three years, that makes the yearly cost of your daily coffee about $239.00. Even if you add in some other ingredients that make you the ultimate barista, it’s still far less than hitting the Starbucks drive through.
[Editor's Note: My preference is to buy my own beans and make coffee with a French Press which you can buy for about $20.]
Calm down. We’re on your side.
In a world where the landline is going the way of the VCR, the cellphone is quickly becoming a necessity. Professionally, employers expect that they can reach us almost instantly and we want to have constant contact with our family.
Here’s where it all breaks down.
Do you globe trot in a private jet? Do you live on a multimillion-dollar estate? Do you drive a Ferrari?
Probably not and that’s because you can’t afford those items. You’re not upset that you don’t have them. You’re perfectly happy parking your couple-year-old Honda in the driveway of your modest home.
The truth is that you probably can’t afford the Ferrari of cell phones either. The reason you have one is that cellphone carriers allow you to pay most of the cost of your phone over a two-year period.
If you head to Verizon and pick up the cheapest iPhone 5 and activate it with a bare-bones plan, it’s going to cost you about $1,800 the first year and $1,600 the next. If you add all of the bells and whistles, it’s going to set you back more than $3,400 for the first year and about $3,000 the second year.
Can’t live without a smartphone?
That’s OK. You can pick one up at MetroPCS for $99 and sign up for its $40 per month basic plan (contract free) and spend about $648 for the first year. A smartphone is certainly not a need, though. You can pick up an even cheaper phone and save more.
The drive through is a glorious thing and sitting down at your favorite restaurant after a stressful day at work might be even better.
Oddly, this idea that nobody has time to cook anymore has made eating out a necessity in the minds of too many. Without factoring in alcohol, an average dinner for two at a chain restaurant is $27 including tip. That’s a little over $2,800 per year if you eat out twice each week. Eating at home would cost that same couple about $11 per meal or less than half the cost of eating out on an annual basis.
What about the notion that there is some premium to consider where the amount of time you don’t spend cooking is time you can spend earning? That could be true in rare occasions but does it really take that long to heat up a steaming bowl of vegetable soup or a plate full of homemade spaghetti?
Here’s what is worth noting: Americans don’t believe they’re winning the money battle. They feel like prices are rising, wages are falling, and saving is impossible.
That, to a large degree, is true. What so many Americans fail to recognize is that their perceptions about what is essential and what isn’t, are flawed. It’s a lot easier to cut expenses than it is to make more money. Start by reducing one expense and see what happens. Then cut or reduce something else.
Small reductions add up to big savings.