Last week we started a series on money management. We focused on the importance of having a budget and sticking to it and we also gave you homework (did you do it?). This week, we will focus on knowing the difference between our needs and our wants.
It may seem elementary, but it is important we know and understand the difference between the two. Many times we confuse them (we do too!) so it is imperative to know the difference and to adjust our budgets accordingly.
In all budget templates, there are sections where you include your needs. These are the goods and services you cannot live/work without. The usual ones are food, clothing and shelter. For some, an automobile is a necessity, for others, a computer is, and the list goes on. In these same templates, there are also sections for your wants. These are the items you pay for because of your lifestyle. When you created your budget, did you take time to really assess your needs and wants? If you are struggling with covering all your expenses monthly, take another look at your needs and wants and modify them. Here are ways to do so:
1. Research Options For Your Needs – We all need food, clothing and shelter, but the costs and options for all three vary across cultures, countries and prices. You may also need an automobile, but do you need that make and model you are drooling after? Can you afford it? You may need new clothes, but do you need the brand names you see in the ads? Do much research when it comes to purchasing groceries, clothing and your living quarters. You may be limited at times due to a number of situations, but still do your part to find the most affordable prices when it comes to necessities.
2. Review and Modify Your Wants Often – Are you a part of a gym or a club? Do you love eating out? Do you have subscription services? If you are struggling to make ends meet, consider canceling or limiting the amount of money you spend on these discretionary expenses (entertainment, travel, hobbies, etc…). You may need to pause on some of these for a few months or you may have to cancel them indefinitely; sometimes, you may find cheaper or free alternatives when you do some research. The internet, marketplace sites and classified ads are amazing resources in this regard, so don’t get depressed if you have to say goodbye to a beloved service. Research your options.
We hope you can take an honest look at your monthly (or biweekly) budget and make adjustments when it comes to the amount you spend on your needs and your wants. Exhale, it may be difficult in the beginning, but with practice, it should get easier and better. Send us a comment or an email to let us know how it’s going. We’d love to hear from you.