An important concept to understand when beginning your budget is your needs vs. wants. When you talk to a four-year-old, you’ll hear them say how much they “need” that ice cream, “need” that action figure, “need” a pet. What they don’t understand is that same thing that many adults fail to comprehend: a need is not the same as a want.
Basic human needs include food, water, shelter, and clothing (unless you’re a nudist or in a third world country, you’ll need clothing to leave the house legally). Those are your physical needs. There are other basic human needs, illustrated below, but for the sake of today’s post, we’ll stick with the physical needs as the others tend to cost you less.
For your budget, which I know you’re dying to start, you’ll need to understand in which categories certain items belong. For the record, I know that based on today’s world, there are more needs than just the basics.
Housing: Do you rent or own? Are you responsible for the upkeep of your household or is someone else with whom you aren’t sharing finances?
Transportation: Are you using a car, bike, or walking? How many cars do you really need?
Clothing: How many seasons are there where you live? Do you have enough to last you all those seasons? Can you go more than a week without having to do laundry?
Food/Water: Are you consistently throwing food away? Are you spending over what you had thought you would for groceries every week? How often are you going grocery shopping?
Wants (This list could be endless, but I’ll just tell you mine so you can have an idea):
Wifi: Yes, unless you work from home or are taking online classes, having Wifi is an unnecessary expense. Thankfully, my husband works from home and we’re both taking online classes.
Computer: Once again, unless you work from home or are taking online classes, the need for a computer is limited. With all you can do on that smartphone, you hardly use yours anyways!
Smartphone: You could really go with an old clam shell phone and it would be cheaper
Pets: This is where I fall, I love my pets, and I definitely want more, but I know that it’s a want and not a need. And I’m in no position to entertain the idea of yet another mouth to feed in this household.
Running shoes: Eventually, I’ll need a new pair, but for now, mine are fairly new. But, like many other women, I have a hankering for some shoes. Mine just happens to be for running shoes.
Cable: With so many cheaper online streaming options, you could save so much money by skipping out on the cable (or satellite, if you want to get technical). Hulu is $8 a month, and Netflix is $10 (I think). And realistically, you could have much cheaper (and healthier) hobbies than sitting on the couch for 5 hours a day watching television anyways. (The average American watches 5 hours of TV a day)
Although it may seem difficult to discern sometimes, when you find yourself in a difficult financial spot, you should always consider whether what you are about to purchase is a need or want. Particularly, if it’s a want, is it something you can afford right now, or would that money be better spent elsewhere?