Needs vs Wants – are we disciplined enough?

03 Aug 2020

We are all victims of impulse or unplanned spending. Our budget usually flies out the window when we see something we want.

Could this weakness be the result of us not knowing the difference between needs and wants? 

Needs are things you must have in order to survive e.g. food, shelter, a reasonable amount of clothes, healthcare, transportation etc.

Wants are things you would like to have but don’t need for survival.

You will be amazed how much we spend on unnecessary items. Add up all these buys and you will be shocked by how much it is.

To maintain a healthy budget and be able to save, we need to discipline ourselves when it comes to spending.

•    Needs come first – This is the first thing that the budget should cover.
•    Next are savings for retirement, education etc. – it is important to start early for retirement. 
•    You also need to have an emergency fund for unforeseen expenses (no, this is not for unforeseen want buys)
•    You need to add ‘wants’ spending into your budget. You work hard for your money and deserve to spoil yourself. Just in moderation.
•    Allocate a certain amount to your ‘wants’ fund, so if you want to impulse buy then use that.
•    Plan your ‘wants’ spending. Shop around until you find what you want. Budget for it and go get it.
•    If you do not spend it, then it can go towards next months ‘wants spend’.
•    Draw your ‘wants’ allocation in cash. This way you won’t lose track of debit card spending. It’s very easy to swipe a card. 
•    If you overspend on a ‘wants buy’, then that extra money has to come from somewhere – Your needs budget will have to be reduced to make up the difference.
•    It’s all about compromise and discipline. You can’t spend what you don’t have.

By planning your impulse spending and allocating a monthly ‘wants allowance’ you can get back on track with your finances. 

Chat to your deVere adviser to help you set up a budget and start planning for your financial freedom. [email protected]

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.