Necessities cannot be ignored and have to be bought no matter what. This can include clothes, shelter, food, etc. Other things you are attracted to or desire to be in possession of, like a movie ticket or a souvenir, a fancy dress, etc., are wants that you require for happiness. But how do you balance your needs and wants in your budget? Read on to find out.
Giving in to the caprice of buying can drain your emergency funds for extravagant wants, but what if we told you there is a way to fit both wants and needs in the budget and yet you will have some cash left in your budget? Read below to find out the clever ways that can help you to create a budget that is adaptive to your needs.
Finding your needs
Expenditures that support your survival are the financial needs that you need to have without compromising. They consume most of the paycheck and are recurring in nature. For example, bills, mortgages, loan payments, etc. The most basic needs of life include:
- Electricity and gas.
Find your wants
While your survival is dependent on your needs, wants are luxuries or things that make your life more comfortable. They can be with or without wants, but you just like these things and want to enjoy their presence in life. For instance, clothing is a need, but flamboyant clothing is a want. Here is what wants usually include:
- Gym membership.
- Coffeehouse drinks.
- Designer clothing.
Wants and needs vary per person. For example, for some people a car is necessary but some people can also do it with a two-wheeler. Another example is that you already have ten tops in your closet, but you eye that fancy top at the mall and buy it because it looks pretty, that is a want.
How to include needs and wants in your budget?
To make a budget that is not leaning only on one side, you will have to start by noting down things you need to buy in a month. Including toilet paper and even a brush. Then categorize your purchases like phone, cable, or toiletries.
Further, divide the categories into needs and wants. Like a new dress under wants and a phone plan under needs. Tally the total amount and execute it with the 50/30/20 method. This entails that you spend 50% on needs, 30% on wants, and 20% on savings and resolving your debts. If you still feel that the spending pattern is irregular, try making these two changes:
- Shuffle some things
Maybe you categorized a need into the wants section, so assess the same and remove any blunder by replacing it.
- Spend less on wants
If most of your budget is going towards wants, it is time to trim them and save your money by eating out less or traveling in a budget-friendly mode.
- Spend less on needs
Compare prices at groceries instead of buying them from only one location. You can save a good amount on car insurance by shopping around.