by Thomas Schipani

Created on: May 22, 2008   Last Updated: June 10, 2008

Per Mr. Webster, "need" is defined as "the lack of something desirable, useful, or necessary." "Want" is defined as "To wish for or desire; to need; to fail to possess a required amount. The state of lacking a required or necessary amount." Not very helpful. "To need" is a definition of "want". When we say "need" we will mean only "the lack of something necessary." When we say "want" we will mean "Something wished for or desired"

These are matters of degree. To successfully reorganize one's finances requires more than definitions. It requires some soul searching about what is truly required compared to what is merely desired. The answers will depend on your own view of the world, your own financial standing, the society you live in and other factors. To succeed, you must ask yourself some hard questions and the give yourself some honest answers. It's a matter of prioritizing what is truly important.

A short review of Maslow's Hierarchy of Needs can provide some understanding. In 1943 Maslow proposed a five layered hierarchy of human needs with the most basic at the bottom. People generally do not try to address needs at a higher level until their basic or lower level needs are met. For example, if you have no food to eat, about the only thing you are going to do is to look for food.

The lowest is the "physiologic" We need to breath, eat, etc. Since air is free (at least for now!) we can focus on food. Spending on food, therefore, sounds like a need. When does this need go from need to want? When you move from mac and cheese to caviar. Exactly where along the mac and cheese to caviar line this change from want to need occurs may look very different to an American living in an affluent area than it does to someone from say Haiti. Where does this happen for you? Store brands instead of premium brands? Eating in or eating out? Steak or hamburger?

The next level of the pyramid is "safety". This includes having a safe place to live, secure employment, that your family is safe, etc. Clearly a rat infested apartment in a run down building in a high crime neighborhood is not as safe as living in a secure doorman building on the upper East Side of Manhattan. But do you really need to spend millions on housing to be safe? How much of your housing costs are keeping you in a safe place instead of a desirable place. A place you need to be instead of a place you want to be? You need to have some income to buy anything and maintain a place to live. For most of us this includes

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