There comes a time that you have to look over your finances and reorganize your budget costs. In order to accomplish that task, you must be able to identify your needs vs. what you want. There are things in our lives that we feel we can’t live without. That would put them under the category of needs. It may be of great benefit to you to exam it closely to see if you really need it or if you simply want it.
Here is a guide to help you identify your needs vs. your wants when reorganizing costs:
What Do You Need It For?
You first must distinguish what the need is for that expense. For instance, the internet is something that most people want in their lives. You have to assess whether you truly need it or if you just want it because you like it.
Do you do important things on the internet like work, banking that can’t be done at the bank or you are homebound and that is the only way for you to communicate with others? If so, then you probably do “need” your internet service. If you keep internet service because you like to chat, play games, upload pictures or any of the number of things you can do to goof off, you could probably live without the service. It is a want rather than a need.
Can You Get It Cheaper?
If you have identified that you “need” something, you then have to look at how much you are paying for it. You don’t need to have high speed internet. That is a want. It could pay to change over to a different source to lower your costs. This will allow you to have what you want at a lower rate.
Everyone needs groceries, but do they need the most expensive brands? Probably not. You can buy generic brands of food for a much lower price. You aren’t skimping on quality or taste. Generic brands most often taste exactly like the name brand. Name brand items are a want, not a need.
Break It Down
If you can’t identify your needs by thinking it through in your head, write it down. Make two columns. One should be headed need and the other one want. Let’s use groceries as a guide for this. In the need column, write all of the things that you absolutely have to have. This will be things like meat, vegetables, milk and eggs. In the second column, write down all the things you buy that are wants. Cookies, potato chips and soda’s could all fit into this category.
When you have written down everything that you can think of, go back over the list. Look carefully at the need list to see if there is anything that can be moved to the want list. For instance, boxed or frozen meals are not a necessity. They are convenience but you can make homemade meals at a much lower cost.
Now that you have identified the need vs. the wants, you can reorganize your costs so that your money works more effectively for you. Making up a budget is a difficult thing to do. You must first decide on how much to spend, how much to save and many other issues in order to do it. You also have to guess at what will be available for spending. Cutting out unnecessary things or cutting the costs of the items you need can make a huge difference to your wallet. You first must identify your needs and cut back on your wants.