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

    The act of combining several loans or liabilities into one loan. ...
  2. Personal Spending Plan

    Similar to a budget, a personal spending plan helps outline where ...
  3. Fudget

    A falsified statement of income and expenses. A fudget or "fudget ...
  4. Capital Project

    A long-term investment made in order to build upon, add or improve ...
  5. Haggle

    When two parties involved in the purchase of a good and service ...
  6. Unlevered Free Cash Flow - UFCF

    A company's cash flow before interest payments are taken into ...
  1. What is the difference between operating cash flow and net income?

    Learn how net income is an income statement for a certain period of time, while cash flow shows inflows and outflows based ...
  2. How do you calculate operating cash flow in Excel?

    Lenders and investors can predict the success of a company by using the spreadsheet application Excel to calculate the free ...
  3. What are common factors that lower your net worth?

    Net worth is determined by calculating financial assets versus liabilities. As the liabilities increase versus the assets, ...
  4. What does your net-worth consist of?

    Discover what your specific assets and liabilities are and how to classify the components that go into calculating your net ...

You May Also Like

Related Tutorials
  1. Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings

  2. Taxes

    The Complete Guide To Retirement Planning For 30-Somethings

  3. Budgeting

    The Complete Guide To Vacation Properties

  4. Budgeting

    The Greatest Market Crashes

  5. Options & Futures

    Advanced Financial Statement Analysis

Trading Center