‘Salary Credited’! This message not just brings a smile to your face, but also lets you take your pick from your needs and wants. Choosing between the two is like battling between an inner child and a responsible adult. Here, the adult version of you focuses more on the bare minimum of life and getting rid of all the excess to focus on the essentials, while the child in you wants a king-size life.
Financial planning, as they all say, begins with creating a monthly budget. But, before you get on with it, it is important to define what your ‘wants’ and ‘needs’ are, which also happens to be the most difficult step. Wants and needs differ from person to person, whereas some people could even categorise certain wants as needs incorrectly due to the inability to imagine living without them.
Achieving the balance between needs and wants means identifying the blurred line between the two. Although it can get hard to identify which expense falls in which category, taking control of your spending is half the battle won. A fundamental shift in the way you view your spending could work wonders when it comes to finding the balance.
When you need to cut down on your expenses and save money, getting rid of your wants is not as hard as it seems. Just because something is a need, its expense is not implacable. Let’s understand this with an example. You may discontinue your membership in the gym and start working out in your neighbourhood or at home. Similarly, you can cut down on your commute expenses by walking or carpooling to your destination.
It is imperative to ensure that you take mindful spending decisions, failing to do so can make your financial consequences dire. ‘Do I really need this?’, is what you need to ask yourself before every purchase decision is made. Budgeting can be a friend in such cases where you plan your expenses for a particular period. Exercise the 50-30-20 rule, where 50% of your income after tax is spent on needs, 30% on wants and the remaining 20% on debts and savings.
“Pay yourself first. Prioritise spending on savings and debts before things like lunch outings and luxuries.”
What you need is the right money mindset and the knack of spending on things you need and not desire. Being broke starts right where you make unnecessary spends while having money means mastering the art of financial management. Having said that, being broke does not always mean being in bad shape. Being broke often helps you plan better, spend better and save better in the near future.
As we all have understood the difference between wants and needs, it is only fair to say that you can take control of your spending and avoid procrastinating on saving for the future. This way, you’d not ask yourself whether you’re broke and would have enough money to rely on, even at the end of the month.
Companies these days offer a whole bunch of financial products that make your life easier with financial security plans, savings options, life cover options, and more. Finserv MARKETS is one such digital marketplace where you can find a solution for any of your financial problems in a jiffy. So, take control of your finances, invest in yourself and build wealth.