The Complete Guide To Planning A Yearly Budget - Needs Vs. Wants
  1. The Complete Guide To Planning A Yearly Budget - Introduction
  2. The Complete Guide To Planning A Yearly Budget - The Importance Of Yearly Budgets
  3. The Complete Guide To Planning A Yearly Budget - Making Budget Projections
  4. The Complete Guide To Planning A Yearly Budget - Needs Vs. Wants
  5. The Complete Guide To Planning A Yearly Budget - Creating A Yearly Budget
  6. The Complete Guide To Planning A Yearly Budget - Investing The Money You Save By Proper Budgeting
  7. The Complete Guide To Planning A Yearly Budget - Conclusion

The Complete Guide To Planning A Yearly Budget - Needs Vs. Wants

When budgeting, it pays to be mindful of needs versus wants. Needs are things that you must have in order to survive - food, shelter, clothing, healthcare and transportation. Wants, on the other hand, are things that you would like to have, but you do not actually need in order to survive. Sometimes the line gets blurred between the two.

For example, you need a home - a roof over your head, a place to stay warm and dry. Your home, therefore, is a need. Often, however, people want to have a bigger home, or one with upgraded kitchen appliances, hardwood floors and a swimming pool. At this point, we've moved beyond a need and entered into want territory. If you are living beyond your means, you cannot justify this house as a basic need.

Cars are another example. You need a car to drive the kids to school, get to work and run errands. But do you need that big SUV that not only costs twice as much as another car that would have done the job just fine, but also costs more in gas? You need the car, you want the SUV. See the difference?

There are expenses that will be wants for one person and needs for another. You may want a high-speed Internet connection at home so you can check Facebook, watch videos or surf. Someone else may need that high-speed connection in order to work from home. The bottom line is this: it's important not to rationalize some expenses away by pretending they are needs when they are actually wants. Be honest with yourself and with your budget.

The Complete Guide To Planning A Yearly Budget - Creating A Yearly Budget

  1. The Complete Guide To Planning A Yearly Budget - Introduction
  2. The Complete Guide To Planning A Yearly Budget - The Importance Of Yearly Budgets
  3. The Complete Guide To Planning A Yearly Budget - Making Budget Projections
  4. The Complete Guide To Planning A Yearly Budget - Needs Vs. Wants
  5. The Complete Guide To Planning A Yearly Budget - Creating A Yearly Budget
  6. The Complete Guide To Planning A Yearly Budget - Investing The Money You Save By Proper Budgeting
  7. The Complete Guide To Planning A Yearly Budget - Conclusion
RELATED TERMS
  1. Main Home

    A term used by the Internal Revenue Service (IRS) to define the ...
  2. Away From Home

    The IRS criteria used to establish whether or not you are within ...
  3. Budget

    An estimation of the revenue and expenses over a specified future ...
  4. Opportunity Cost

    1. The cost of an alternative that must be forgone in order to ...
  5. Needs Approach

    A method of calculating how much life insurance is required by ...
  6. House Swap

    A practice in which the owners of a home allow the use of that ...
RELATED FAQS
  1. How do I retire?

    When considering how to plan for retirement, firstly think about the age at which you want to retire and the lifestyle you ... Read Answer >>
  2. I want to buy a stock at $30, sell when it reaches $35, don't want to hang on to ...

    Once you've identified a security that you want to purchase, you need to determine a price at which you want to sell if the ... Read Answer >>
  3. What is the most effective way to write a successful budget?

    Learn the best way to create a successful budget. Learn how to cut unneeded expenses without impacting what you need for ... Read Answer >>
  4. Why can't I enter two sell orders on the same stock?

    To answer this question, let's look at a few different situations. You bought a stock for $10 but want to be able to protect ... Read Answer >>
  5. Is it true that you can sell your home and not pay capital gains tax?

    It is true in most cases. When you sell your home, the capital gains on the sale are exempt from capital gains tax. Based ... Read Answer >>
  6. What are the key points when getting ready to file for unemployment aid?

    Before filing for unemployment aid, you must be unemployed, have worked in the past, lost the job through no your fault of ... Read Answer >>

You May Also Like

Trading Center