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Needs Versus Wants In Budgeting

Financial Literacy Month 2014: Budgeting Divas - Your Finances From A to ZToday’s topic for Financial Literacy Month 2014: Your Finances from A to Z is Needs Versus Wants

For the month of April, we will be bringing you daily posts centered on our personal finances – saving, making and managing our money.

A key step in budgeting is learning how to distinguish your needs from your wants.  For those that are working on a debt pay-off plan, this is an essential step and includes a change in behavior patterns.
In order to make significant strides in frivolous spending, you have to decide if your spending money because you need to or if it is something that you just want.  My children and I had a conversation recently regarding our cable service. To them it was a necessity because they are accustomed to having it; however, when I pointed out the plethora of DVDs we have accumulated over the years and the ability to watch many of the same shows they watch via online services like Amazon Prime or Netflix the light bulb went off that it really was a service we could do without.
Budgeting Needs Versus Wants: Separating what you have to have with what you would like to have

 

Needs are fairly easy to be identify.  Our basic survival needs are food, water, shelter and clothing.  As a parent, I classify reliable childcare as a need.  Most parents will agree that without reliable childcare, we are unable to work or obtain work. There has even been attention in the news of late regarding women who had to make drastic choices when going on interviews because of their lack of childcare.

Wants are everything that do not fall within the need category. The line between need and want can become blurred when we begin becoming specific with our needs – we need water, but we want a specific bottled water brand.

Many of our wants can be eliminated or traded for less expensive options to help with our journey to saving or debt pay-off.

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