by When Joe and I ran our real estate practice my role was to focus on buyers. As part of helping buyers I made everyone (yes everyone) go through a buyer interview process. Now if everyone did a “financial interview process” at age 18 and revisited every few years we are confident that more people would reach the financial future they truly desire. Why is that relevant to finance? Well there is one question that I asked each buyer as we went through the interview that generally would cause them to take a moment of pause. The question quite simply goes like this:
Is that a nice to have or a have to have?
I repeated this question after nearly any item related to the property. For example consider the following dialog:
Me: Would you like inside laundry?
Client: Yes
Me: Would you say that is a nice to have or a have to have?
Client: hmmm, ok well it doesn’t have to be in the house, it could be in the garage.
Me: Ok
Or
Me: Would you like 2 parking spaces? (dealing with condos)
Client: Yes
Me: Would you say that is a nice to have or a have to have?
Client: Well I only have 1 car, so I guess it’s a nice to have feature.
Me: Ok then
As you are developing the best path to your financial future inevitably you are going to need to make decisions on what is nice to have (for today) and what is a have to have. While this may sound obvious to some, far too often budgets go long periods without being evaluated and the list of “nice to haves” has grown much larger than originally anticipated. By now you know we aren’t going to recommend “cut everything but the essentials” because we know that fundamentally won’t work for the majority and is more akin to a crash diet vs. a healthy eating lifestyle.
So what are a few examples of nice to have vs. have to have? Here are a few examples to consider from our world that might align to you as well.
Strava Premium Membership: $60/yr
Have to Have…for Us
Each year we have a goal of a minimum of 3,000 miles logged between cycling, running, and swimming. The premium membership of Strava costs us $60 a year and we find it helps to look at the data to evaluate our performance and health.
This certainly falls into the “nice to have” column and while Joe and I aren’t huge believers in monthly subscriptions we like the aspect that it is a one-time annual fee it is one we have actively used for 8+ years at this point.
Starbucks Coffee: $708/yr?
Nice to Have
This is not yet another “oh my you are going to tell me to cut my latte” post. No, no, we understand that getting a treat from Starbucks can help keep that mental energy up and keep you working on your goals. What we are going to challenge you is with the following question:
How much of Starbucks is a Nice to Have vs. Have to Have?
For Joe and I we drink black coffee. Yes black coffee, no cream, no sugar, just black coffee. And while our coffee is pretty much the cheapest on the menu at <$3 per cup we still don’t go to Starbucks that often. For us we decided that while we “have to have” coffee daily we are ok making it ourselves. This means that we traded by getting ground coffee or our favorite Keurig cups at Costco for as little as .56 per cup (a big savings compared with a $2.95 venti black coffee).
Think about this for a moment. If we have 20 cups of coffee a month (easily 1 per morning) that means the following:
- Make at home: $11.20
- Buy at Starbucks: $59
This delta is $47.80 a month which is only $2.20 off of the minimum amount you would need to put a monthly contribution in at Vanguard. We can’t see giving up coffee entirely but we did see going to Starbucks as something that was nice to have vs. have to have.
In the analysis of “nice to have” vs. “have to have” there aren’t any wrong answers…unless everything is a “have to have” which means you probably need to revisit your times. Our challenge to you is to look at your monthly spend and evaluate what you absolutely need to keep, what you can eliminate, and what you might be able to eliminate.
