Your spending priorities – are they actually Needs, or Wants?
One of the key steps in building a budget is identifying your personal spending priorities as a starting point.
However, have you ever stopped to think how important those priorities really are to you? That might seem like a contradiction in terms, but bear with us – this is actually an important question in understanding the difference between our ‘needs’ and our ‘wants’.
We might have a list of things we think are important to us – and which we therefore class as our priorities – but it might be worth examining that list to divide the items into essentials or needs – things we require to live and sustain ourselves such as paying our rent, meeting our bills, buying food etc. - and wants, which we can define as things that are more of a choice, or perhaps even a luxury.
Now of course this subject can get very controversial and each person is going to have different reasons for categorising the items on their list in the way that they do. But it is worth thinking through which items come under which heading, and ordering our ‘spending priority’ list accordingly, to focus on being able to afford the ‘needs’ before the ‘wants’.
You might also want to spend some time thinking about the features of the items on your ‘need’ list. For example, a laptop – you might need that for work or study, but is it necessary to buy a top of the range, new machine? Could a second-hand or cheaper model do the job, saving you money in the process? Or perhaps looking at food, which of course you need to buy to survive, you could ask yourself whether it’s essential to buy the types or brands of food that you do (think convenience items e.g. grated cheese, chopped tomatoes, prepared fruit) or if you could ‘downshift’ with the brands you buy (you might not even notice the difference!).
Whatever you decide to do, it is certainly worth bearing the difference between needs and wants in mind as you consider your priorities, to ensure you don’t make assumptions, but challenge yourself to have a list of priorities that really reflects how you aim to spend your money as part of your budgeting plan.
