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Trade-Off’s to Consider

In Life we are often presented with choices of one thing over another. We might love both coffee and tea, and yet when offered a warm drink by a friend we are expected to choose one over the other. In making our choice there will be consequences to that choice.

As an example, in the case of a story my mother loves to tell about my father where she asked him if he would like coffee or tea and he replied “yes”, the consequence of his choice in response was that she served him both coffee and tea, in one cup! YUK!

The point being, we are constantly faced with choices and we’re often trading off one option for another and there are consequences to our choices.

Wants vs Needs

We face this concept of trade-off’s when deciding whether to spend our money on things we want or things we need. Sometimes it’s even hard to determine whether something is a want or a need in the first place.

In 1943 Abraham Maslow presented a paper called “A Theory of Human Motivation” in which he described a Hierarchy of Needs. He believed that we move through different levels of needs, starting from the bottom where we are faced with :

  • Physiological Survival Needs
  • Safety Needs
  • Love & Belonging Needs
  • Esteem Needs
  • Self-Actualization Needs
  • Self-Transcendence Needs (this one was added much later)

Financial Trade-Off’s

Often our financial needs are focused on Physiological and Safety needs as a priority. Things like a roof over our head (rent, a bond), water, food, a bed to sleep on, clothes to wear and a safe space to live in (security company, area we choose to live in, people we choose to live with). Following that we might spend money on our social needs including transportation to get us to work so we can earn and income or to explore, or for experiences with our family and friends. After that we might prioritize education and growing ourselves or pursuing a purpose or career or hobby that feels fulfilling.

What are the financial trade-off’s that you face?

Whilst it might be essential to have a roof over your head and a safe neighbourhood to live in, did you buy a house using the full homeloan you qualified for? Did you consider taking a smaller loan and spending less on a house?

If you’re renting, what impacted your decision to choose to rent the home you’re in now vs one that was renting for less?

Getting from A to B is important, however did you choose the car you’re driving because it is the most economical one or because you like how it looks?

When thinking about your Current Income & Expenses, we asked you to calculate the difference you have left after you’ve paid for your needs so that you can now spend time thinking about what thoughts and feelings are driving your decision to spend on your wants, and do you have other options?

Meeting the Needs that drive our Wants

There is nothing wrong with wanting nice things. There is nothing wrong with wanting lots of money, or a big house, or fabulous clothes, or the trendiest car or gadget.

The purpose of getting mindful and intentional about our money is to spend time asking ourselves what is driving the need that we try to satisfy through the things that we want. If we are able to identify the need, then we are empowered to evaluate whether we will really satisfy it through spending money on our initial want, or to look at alternative options and allow ourselves the chance to make a more self-serving choice.

As an example, I once worked with a client, we’ll call her Margaret, who wanted to cut back on her spending because she had goals for herself that she wanted to redirect money towards. The one area of spending she was looking to cut back on was spending money on eating out. When we explored what need was being met by eating out she expressed that she would socialise with her friends and family at restaurants. We then explored how she could get the need to connect with her friends and family met in a way that would result in spending less money on eating out. She thought about it and came up with ideas including going for walks on the beach, going for coffee at a coffee shop instead of a dinner, packing a picnic and meeting up in a park, entertaining at home where she could cook a meal or host a bring and share or a braai. What was important for Margaret was to see that she didn’t have to give up socialising with those she loved in order to save money. She could meet her need for Love & Belonging AND direct her money towards other important things.

It’s now time to consider your own trade-off’s. Click “Start Assignment” to begin.