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Many people make the mistake of categorizing an item as a need simply because they feel like they won’t be able to live a full life without it. You may end up realizing that you have committed that same mistake again when you finally write things down and truly separate your needs and wants, as you budget your money. It is best to learn why these two things are different from each other in order to successfully separate one from the other.
Needs are Things You Cannot Live Without
There is such a profound definition attached to this term, which may lead to confusion later on. Take for instance, your old but reliable phone suddenly refuses to switch on. You feel like you cannot live without any phone at all. You use it for work and to contact those who are close to you. From there, you will want to replace it. After all, it is an item you cannot live without.
You visit a store and you have seen a new mobile phone model on one of the store shelves. It features the latest technologies that everyone else is so elated about. But of course, that new phone comes with a hefty price tag. You still decide to buy it in order to impress others. In this instance, it turns out to be a want simply because you want to become one of the first person to buy the mobile phone while everyone else is still waiting on line. Have you asked yourself if you can settle for an older, cheaper mobile phone model that is more practical, with fewer bells and whistles?
Which of Your Needs Are Actually Wants?
It is important to determine if your supposed needs are actually wants. When you are working from home, for instance, the Internet becomes a need. Without it, you cannot conduct business. However, if you use the Internet just to browse through your social media accounts and for other purposes that do not benefit your business, it becomes a want.
Separating Needs from Wants
List down items that you think best describe your needs and your wants. Apart from writing “Internet,” you will be surprised to find out that you are listing too many items under the ‘needs’ category, when in fact they belong to the ‘wants’ category. Cable TV, for example, tend to be categorized as a need, but is in fact the opposite. Any item on your list that you can survive without is a want and not a need. Try to prioritize and you will find out that there are items that can be eliminated from your budget list.
Summing Things Up: Needs, Wants, and Budgeting
If you try to dig deeper on the real purpose of separating your wants from your needs, you will see how you can budget your monthly pay accordingly. Fifty percent of your entire net income must be spent on your needs while 30% of it can be spent on your wants. The remaining 20% should then be allocated as savings or can be spent to pay for your credit cards or any outstanding loan you have. As long as you follow this rule, then there is nothing wrong with deciding to spend a portion of your income to pay for those fancy items you have always wanted.
A common “need” for individuals, who are working abroad, is sending online money remittances to their loved ones. If you are looking for a trusted remittance platform to work with, look no further than Sharemoney.
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