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(Graphic by Sarah Lazarovic)

Needs vs Wants When it Comes to Budgeting


By definition a need is something that is required, essential or very important. On the other hand, a want is something you have a desire to possess, or something your wish for. When budgeting, you really only have a few basic needs. You need shelter in which to sleep, food to sustain you, clothing and shoes to cover and protect your body from outside elements, and transportation to take us to work so we can pay for the things listed above. That’s it. Everything else is a want.

Shelter can be anything from a tiny home to a motorhome; from a studio apartment to a home with a backyard for kids and dogs to play.

Food to sustain us can be anything from beans and rice and ramen if money is tight, to fresh fruits and veggies and more expensive cuts of meat.

Clothing and shoes at the basic level are to cover our bodies in the blistering heat, and insulate us when the weather is bitter cold.

Transportation is a necessity to take us to and from work to make an income to pay for our basic needs. However, your mode of transportation can be a bicycle, a skateboard, a bus pass, a train ticket, a ride-share, or your own car.

Again, that’s it. Those are our basic needs.

So why do budget templates include other categories such as subscriptions (like Netflix and Amazon Prime), makeup, haircuts, manicures, and pet insurance? Because in our society of abundance we often get confused about what is a want and what is a need.

There’s a general guideline that states that 50% of your budget should be for “housing”. By “housing” I also mean utilities, food and transportation. This same guideline suggests that 30% of your budget is for “personal” items. That includes medical expenses, medicines, insurance, clothing and things such as haircuts and manicures. If you have pets, all of those expenses would fall into this category as well.

The other 20% of your budget is for saving. That means any retirement savings, charitable giving, college savings, emergency savings, etc. would come from this 20% of your budget.

I personally think that 50/30/20 is a skewed breakdown. Especially if you live in a state or city with higher cost of living such as California or New York. Your housing costs are probably going to be above 50% of your budget. If that’s the case, you’re most likely looking at closer to 60% of your budget being for you basic needs.

When creating a budget you should plan for your basic needs first. Then as money allows, begin to fill in your “wants” or your personal expenses in order of priority. (Medical insurance should take precedence over manicures or the “entertainment” category.) Take a look at this budget worksheet template to see the different categories used when creating a budget. Really think about whether something is a “want” or a “need” and write a “W” or an “N” next to the category. Once your worksheet is filled out and your wants are prioritized, then you can fill out the monthly budget template which is also included in download.

Remember, a budget is just a plan for conscious spending. If you have other categories you need to add, that is perfectly acceptable.

Also check out our blog post on the three (3) mistakes people make when creating a budget, and how to avoid them.


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