Prioritizing Your Spending: Understanding the Difference between Needs and Wants in Budgeting
When creating a budget, it's important to understand the difference between needs and wants. Needs are the basic necessities required to survive, such as food, shelter, and clothing. Wants, on the other hand, are items or experiences that you would like to have, but are not essential for survival. Here are a few examples of needs and wants: Needs: Rent/mortgage, utilities, groceries, transportation Wants: Eating out at restaurants, buying designer clothing, purchasing expensive electronics When budgeting, it's important to prioritize your needs before your wants. This means allocating the majority of your income towards covering your basic needs and only spending money on wants after your needs are met. It is also important to note that, what may be considered a want for one person may be considered a need for another. For example, a person with a physical disability may need an electric wheelchair, while a person without the same disability may consider it a want. Additionall...