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How to balance needs and wants in your budget

To make a budget that is not leaning only on one side, you will have to start by noting down things you need to buy in a month. Balancing your needs and wants may not be easy, but a budget will help big time.
How to balance needs and wants in your budget
Giving in to the caprice of buying can drain your emergency funds for extravagant wants. Wants and needs vary per person. For example, for some people a car is necessary but some people can also do it with a two-wheeler.
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Necessities cannot be ignored and have to be bought no matter what. This can include clothes, shelter, food, etc. Other things you are attracted to or desire to be in possession of, like a movie ticket or a souvenir, a fancy dress, etc., are wants that you require for happiness. But how do you balance your needs and wants in your budget? Read on to find out.

Giving in to the caprice of buying can drain your emergency funds for extravagant wants, but what if we told you there is a way to fit both wants and needs in the budget and yet you will have some cash left in your budget? Read below to find out the clever ways that can help you to create a budget that is adaptive to your needs.

Also know about: How to Pay Off Student Loans Fast

Finding your needs

Expenditures that support your survival are the financial needs that you need to have without compromising. They consume most of the paycheck and are recurring in nature. For example, bills, mortgages, loan payments, etc. The most basic needs of life include: 

  • Food.
  • Insurance.
  • Clothes.
  • Transportation.
  • Housing.
  • Electricity and gas.

Also Read: How Does Beem Cash Advance Work

Find your wants

While your survival is dependent on your needs, wants are luxuries or things that make your life more comfortable. They can be with or without wants, but you just like these things and want to enjoy their presence in life. For instance, clothing is a need, but flamboyant clothing is a want. Here is what wants usually include:

  • Gym membership.
  • Coffeehouse drinks.
  • Entertainment.
  • Travel.
  • Designer clothing.

Wants and needs vary per person. For example, for some people a car is necessary but some people can also do it with a two-wheeler. Another example is that you already have ten tops in your closet, but you eye that fancy top at the mall and buy it because it looks pretty, that is a want.

How to include needs and wants in your budget?

To make a budget that is not leaning only on one side, you will have to start by noting down things you need to buy in a month. Including toilet paper and even a brush. Then categorize your purchases like phone, cable, or toiletries.

Further, divide the categories into needs and wants. Like a new dress under wants and a phone plan under needs. Tally the total amount and execute it with the 50/30/20 method. This entails that you spend 50% on needs, 30% on wants, and 20% on savings and resolving your debts. If you still feel that the spending pattern is irregular, try making these two changes:

  • Shuffle some things

Maybe you categorized a need into the wants section, so assess the same and remove any blunder by replacing it.

  • Spend less on wants

If most of your budget is going towards wants, it is time to trim them and save your money by eating out less or traveling in a budget-friendly mode.

  • Spend less on needs

 Compare prices at groceries instead of buying them from only one location. You can save a good amount on car insurance by shopping around.

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Author

Picture of Devanshee Dave

Devanshee Dave

With over 4 years of experience in financial writing and a master’s degree in mass communication & journalism, Devanshee is currently preparing for her CFA (Chartered Financial Analyst) exams. In her spare time, she likes to dance and learn about cosmology, astronomy and anything that can expand her knowledge from the big bang to the big crunch.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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