How to Differentiate Necessities from Wants

[Mika]

A lot of people will tell you in order to become financially stable you need to stop wasting money on unnecessary things. However, the question is how do you do that? A simple answer is to Distinguish between necessities and wants. Only spend money on your necessities and put a hold on spending on your wants and wishes. If you can do that you can easily manage your spending effectively. While breakfast cereal may be a necessity, a cup of coffee may fall under wants. If you are on limited income, you can of course cut coffee. Trimming unnecessary wants and focusing on necessities is a key strategy to curb spending and start building your saving fund.

 

[Abigael]

This is very true. Differentiating between necessities and wants is the first important step to spending money well. Necessities are your basic needs; food, shelter and clothing. But it does not stop there, you need to decide on what you can afford. For instance, why go for designer clothes when you cannot afford them, you are better off shopping for your clothes at the second hand thrift store.

This awareness has to come before budgeting. That way, you can budget on your necessities as a priority.