Okay, just admit it… We all probably know the difference between a need and a want, right?

Unfortunately though, in our world of next (and same) day shipping and unlimited upgrades, the line between the two can get a little blurry. And who of us has time for blurry lines? No one!

So, I want to try to paint a clear picture of needs and wants for you – and show you the best way to get both covered in your budget.

What are needs?

Needs are all the expenses that are necessary for you to live your life.

The most basic of these are what I like to call the 4 Pillars:

• Food

• Utilities

• Shelter

• Transportation

If you’re EVER in an emergency situation like losing your job and you need to get on a very basic budgeting plan – cover these Four Pillars until you get back on your feet.

If your financial situation is more stable than that, other essentials you should include are insurance, debt, and childcare (if applicable).

What Are Wants?

Wants are the expenses that improve your life. Are they necessary? Absolutely not. Are they delightful and enjoyable to have? Absolutely yes!

Here are some examples of wants:

• Streaming services

• Movie, concert, or sports tickets

• Sock or tie subscription boxes

• Upgrades

• Entertainment

• Designer brands

• Guitar lessons

• Travel

• Eating at restaurants

Yes! All of these are great to have; but none of them are vital! If they fit within your budget, great! But you should never sacrifice your money goals or needs to pay for these things. Everything on that list can wait. Miley Cirus will tour again. And if she doesn’t, is it really the end of the world?

What are some wants that feel like needs?

Here’s where the line starts to get blurry. And here’s where we separate the lies from the truth!

Restaurants

Yes, I know, food is one of the Four Pillars; but what I’m talking about is groceries. Because eating is a need – but eating out is a want.

Travel

Again, I know, transportation is one of the Pillars – but that means getting yourself to and from work, and the kids to and from school. Those are the kinds of trips I’m talking about. Travel, however, refers to those fun vacations; and that, is totally a want.

Upgraded Phone Plans

Having a basic, cheap phone plan is pretty standard these days. You probably need it for work and safety reasons. But you know all those extra features and unlimited plans? Yea, those aren’t needs. Those are wants.

Clothing

Kids ask a lot of questions, don’t they? They also get bigger and bigger with time. It’s just how they are! So, you’ll probably need to buy new seasonal clothes most years as they keep growing. And if you start a new job and don’t have the right wardrobe for it, you’ll be needing a few things too. However, buying designer brands or clothing for fun is a want.

And let me just be clear here. I’m not saying you can’t have wants in your monthly budget. This is just about setting and keeping your priorities straight.

So, how do you cover both your needs and wants? That’s a great question!

Let’s get right into it!

How do I budget for wants and needs?

As you’re setting up your budget, just follow these three steps:

1. List your income.

2. List your expenses.

3. Subtract your income from your expenses (this should be zero)

Then blow a confetti popper in the air and pat yourself on the back. Because you just created a zero-based budget! That means you’ve given every dollar (or Riyal) a job — giving, saving, spending… covering those needs and wants.