Budgeting for Your Needs and Wants
Building a budget can be overwhelming. However, there is an easy method that you can utilize called the 50/20/30 budgeting method. With this budget system, your budget will be 50% focused on your needs, 30% focused on your wants, and 20% focused on your savings.
Determining Your Needs
Your needs should always come before your wants. You will want to ensure that you have food on the table and a roof over your head. While the budgeting strategy of 50/20/30 is helpful, you might need to make some adjustments before you can really divide your financials in that way.
1. Keep a Roof Over Your Head
Housing is one of the most important necessities that you should not forego. Proper housing can be difficult to come by, so if you are in a position to be able to afford it, then you should make sure you are paying your bills on time. Even put some money aside prior to when your rent is due or months in advance to ensure that you will be able to keep your living situation. Getting behind on rent can lead to late fees, penalties, and even eviction notices getting posted. So, always ensure that you have enough of your monthly budget allocated to your housing costs.
2. Have Enough Food for a Few Weeks at a Time
Food is something you cannot live without, so you will want to ensure that you are putting aside enough money weekly to keep up on your groceries. If you find it hard to make ends meet due to how much your groceries cost, you may want to check with resources in your area. There may be food programs that are local to you.
3. Create an Emergency Fund
Emergencies happen and when they do, they can sometimes be costly. Put aside part of your savings that is dedicated towards emergency use. This might be used if you suddenly have a medical accident, your car has broken down, or you need to help out a family member. How much you put away into an emergency fund can depend on you and your needs. CNBC reports that financial experts generally suggest putting aside three to six months’ worth of living expenses.
Determining Your Wants
The “wants” portion of your budget is very different from your needs. These are items or purchases that may be more enjoyable to you, primarily because they are not of necessity. While you may be thinking that purchases for things or experiences you want do not have any place within your budget, it is important to allocate some of your monthly budget to this area of your life. When determining where to spend some of this more fun money, it is important to keep your budget strategy of 50/20/30 in mind and not go overboard. Two simple ideas could include:
1. Spend the Weekend Away
Allocate some money to spend a weekend away. Of course, this does not have to break the bank. You could take a camping trip, pack some lunches, or even stay at a hotel a few towns over. You might choose to take this weekend away to spend more time with family and friends, catching up or taking advantage of some much-needed quality time. Depending on your budget, you may be able to splurge and book a more luxurious weekend away. This might include staying at a resort, booking a flight, or choosing higher-end accommodations.
2. Eat Out at Your Favorite Restaurant
We all know that dining out regularly is not good for almost anyone’s budget. However, treating yourself to a nice meal from your favorite restaurant from time to time is something that everyone should be able to enjoy. Perhaps you have been foregoing dining out or your favorite restaurant is seemingly too expensive. However, with proper budgeting, you will be able to treat yourself here and there. Dining out might be a “want” that you choose to place within your overall budgeting strategy.
Spotloan: A Smarter Way to Borrow
At Spotloan, we know the ins and outs of budgeting, creating lending options that work with individuals; not against. The process to find out if you qualify for a Spotloan usually takes less than 10 minutes. Fill out the easy and quick online loan application to see if you qualify.
