How to Save Money. Wants vs Needs!
When it comes to personal finance, I believe you could argue that there is one concept that matters more than any other.
How do you save money? I believe it comes down to deciding what are your wants and what are your needs.
That’s the most important part. It’s also the starting point for your personal finance journey.
Defining what are your needs and what are your wants when it comes to money isn’t always easy. It’s also something that will change over time. Throughout life your wants and needs will shift and move.
First, let’s define what we mean by a Want and Need:
A Need is required spending. It’s a monthly bill or a regular purchase that you must spend money on.
Some expenses that are common Needs are rent or mortgage, gas and electric bills, groceries, medication, and child care.
A Want is a spending choice. Its a purchase you decide to make.
Some expenses that are common Wants are eating out, shopping and entertainment.
Knowing is half the battle.
Simply knowing what is a Want and what is a Need each time you spend money will put you way ahead of most other people.
What did you spend money on last week? Which of those were Wants and which of them were Needs?
Personal Finance is Personal
Here’s where things get interesting. A Need for you may be a Want for someone else. It’s about your personal priorities. Each of us is different. Personal finance is personal.
Fancy coffee may be a Want for you and an easy place to cut down when your budget is tight. For someone else, Fancy coffee may be an important thing that makes them happy each day. For them it may be a Need.
Money is about priorities.
The Tip Yourself approach to budgeting which we call a Spending Plan, is all about priorities. Knowing what’s important to you and what makes you happy is the most important thing you can do when it comes to saving money.
What’s a Need for you and what’s a Want? When you know that answer it will be easier to find money to save each month.
Cutting down on Wants is a great place to start when looking to increase how much money you can save each month. And knowing that something you’re cutting back on is just a Want makes it much easier.
What are your wants and needs each month? Have you made a spending plan? Start today and Tip Yourself! You earned it.
