How To Evaluate Your Needs & Wants
One of the most important budgeting skills is determining your needs vs wants. This sounds like a very simple task, but sometimes the line can get a bit blurry. Use the following wants vs needs worksheet tips to separate your needs and your wants and keep your budget in check.
Needs are basic. If your needs aren’t met, you will not survive. For most people, basic needs include:
- Medical Care
Your list of needs can spiral out from this basic list once you realize what it actually takes to feed, clothe, and house yourself. For example, most people will also need some basic cooking appliances, refrigerator, and a stove in order to feed their family. In order to pay for things like housing and clothing, you’ll probably need a job; In order to get that job, you may need a degree or some training.
Needs will vary from person to person. For example some people use the internet to do their job—this makes internet a need. Other people may be able to get by without it.
As you create a budget, put your needs first. Everyone’s needs can vary depending on what is a priority to them. Once you’ve evaluated your needs, you can make room for you wants.
Wants are things you can survive without. You’ll go on living without a new computer or that new TV you’ve wanted. You probably don’t need a new smartphone every year or the latest video game.
Determining your wants can be very difficult because this category can vary for everyone. Wants are easy to label once your needs are figured out. It’s important to know the difference between your needs vs wants when establishing them.
The Gray Area
This all sounds pretty simple, so why do people have so much trouble managing budgets? The trick is in the gray area—the things that can be categorized as both needs and wants.
For example, you need transportation to get to work. However, transportation is a pretty wide category. Can you ride your bike to work? Do you need to drive in order to get there in a reasonable amount of time? Are there any good public transportation options? If you have a short commute and could easily walk to work—a car isn’t a need. If you have to drive to work, a car is a need.
Use the following questions to help you keep your needs and wants in line.
Is there a cheaper alternative?
- Opt for slower internet or a smaller data plan on your phone
- Buy used clothing
- Eat generic brand
- Take the bus to work
- Move to a smaller apartment
Choosing cheaper alternatives allows you to meet your needs while staying within your budget.
How often will I use this item?
- Will you actually use that rice cooker?
- Will you wear those pants more than once a month?
- Could you use the computers at your local library for your occasional needs or do you need a computer everyday?
If you won’t use something very often, you may not need it. Or you may be able to rent something for a short period of time instead of buying it.
Evaluating your needs and wants may not always be fun, but it will help you stick to your budget and save for the future. Use the questions above to stay on track. We hope you have enjoyed our wants vs needs worksheet. Thanks for reading!