One of the basic views when it comes to saving money and creating a budget is that we must learn how to determine our needs and wants.
Budgeting is the process of creating a plan for your monthly expenses. Through the budget, you can clearly know the expenses and income of your business or personal finance. Creating the budget plan helps you to determine in advance you will have enough money to do the things you need to do or would like to do.
Needs are the things we must have to assist us day to day life: food, shelter, clothing, personal care items, and in most cases safe, reliable transportation. Rest things we can classify as a want: entertainment, electronics, leisure travel … the list of things we want is potentially endless.
Needs vs. Wants: What’s the Difference?
As you might expect, a need is a must-have thing that you cannot go any significant period of time without. Food, shelter, and transportation fall into this category. They are the basics of daily living.
On the other hand, a want is essentially something that enhances your life and that you’d like to have, but that you can get away without having. You should be able to cut wants out of your life without significant or long-term disruption. You might miss dining out, going on vacation or buying new clothes that catch your eye, but you could do without them if you needed to.
- gas for a car
- a car
- Date nights
- Kid Sports
- Life insurance
Budgeting for both needs and wants:
Budget is key to a strong financial foundation for both personal or business. Make a list and add all types of income sources in it like, job salary, pension, income from other activities, etc.
After making a list of your all income make a monthly budget list according to your needs and wants. Means everything, like, from food, clothes, to entertainment, dining out, etc.
In order to find a balance between wants and needs, a person must have their needs met first and foremost. After fulfilling all your needs and paying monthly bills, debts, calculate your monthly expenses from your monthly income. After paying all the bills, debts, check the net income you have. Split your budget into two categories: needs and wants.
If you have sufficient money after paying all necessary items in your decided budget amount then you can move for your wanted list items, like entertainment (Netflix subscription), gym membership, buying a car, etc.
The budgeting app is best to track monthly budgets easily. TakeFin expenses tracking app allows you to record all your expenses on a daily basis. It is an ideal app for both personal or business finance. it gives you a digital view of your monthly expenses and helps you to know where you are spending more money and other activities.
You can add your expenses category wise. It helps you to compare all your expenses to last month and gives you a clear estimation of expenses from your monthly budget.