Budgeting. In the eyes of many it is a rather boring process that requires careful planning on realistic goals to help you achieve financial prowess. To properly budget, it is essential that one must balance their needs vs. wants, however the optimal ratio is often subject to change depending on the financial and demographical status of said person. In this article we will discuss Needs vs. Wants and how one can master their spending habits for the better.

To master your spending you first have to define what a “need” is and what a “want” is. A need is an expential expense like your rent, medical coverage, food, utilities, and transportation. Without properly budgeting allocated to these needs your life will be gratly affected as they are essential items. Wants on the other hand are non-essential items that either are not needed for survival or more presitigious than the adequate item needed. For example, a Gucci T-shirt is obviously a want because despite clothing being a need, a gucci T-shirt is not a necessity, but rather a T-shirt of any kind. 

So how do we properly balance our needs vs our wants? Well, there have been a plethora of strategies taken by budgeters, with the most common one being the “50/30/20” rule. This rule allocates 50% of your income to needs, 30% to wants,and 20% to saving, investing, or relieving your debt. Another approach is to ask yourself when assessing a purchase: “Do I need this to survive/function, and if not, is this financially doable?”

Balancing your needs vs. your wants is a key component to successfully budgeting your money, and while your mindset should vary based off your financial status, it is important to budget in order to achieve the most comfortable life.