Post #197

🏃Human life is full of aspirations. Every day brings new aspirations in our life. It's difficult for people to fulfill those throughout our life. Pursuing every desire of life can take a toll not only on one's peace of mind but also on financial wellbeing. These terms are the step-by-step in understanding the process of financial planning. 🔰What's the Difference An understanding of the terms "need" and "want" is important. The needs are those items which are essential for our survival. In old times, they were the basics. In the modern world, many more things are added to the category of needs, such as education, healthcare expenses, transportation, and entertainment, etc. The money people spend on our needs is considered essential spending. Wants are those items which we feel happy to possess. These are the things that help us live comfortably. There is a very thin line between Need and Want. One's want may be someone's need. The definition of a word may vary from person to person. Shelter is a need. But a spacious apartment in a lush town with all modern amenities is a want. Owning a car in the modern world is a necessity, however buying luxury cars will be a want. It's up to the person to categorize his desires into needs and wants. Life is supposed to be lived and not survived. Treat yourself with those desires along the way, but only if you can afford it and enjoy those desires only in the form of extras. 🔅Prioritization of Needs and Wants Begin by writing a list of all the things you purchase. Group purchases into broad categories such as toiletries, cable, phone and insurance. Divide the categories into two buckets: wants and needs. Summarize the totals and align your priorities. If your current spending is disproportionate based on the list you have drawn up, there is good news: you can make adjustments. Here's a simple way to start: Look at your categories. Some of the items you have mentioned as needs may actually be wants or vice versa. Reduce spending on needs. Even if you have to pay for something, you may not have to pay as much as you currently pay for it. Cut spending on wants. Your wants don't have to drop out of your budget altogether, but you should consider downsizing them. It is also best to use only a debit card with this budget, because it is directly linked to your checking account and automatically updates your balance.