Identify Your Needs and Wants

Needs vs. Wants

When it comes to budgeting, it’s important to understand the difference between your needs and wants. Your needs are the essentials that you cannot live without, such as food, housing, and transportation. These are things that you must have in order to maintain a basic standard of living.

Your wants, on the other hand, are non-essential items that you would like to have, such as entertainment or eating out. While these things may bring you joy and satisfaction, they are not essential to your survival. It’s important to prioritize your needs over your wants when creating your budget. By doing this, you can ensure that your budget is helping you reach your financial goals. For example, if you have a limited amount of money each month, it makes more sense to allocate the majority of that money towards your needs, such as paying rent and buying groceries, rather than spending it on non-essential items.

Further Reading