A Need is a required purchase to pay bills for the essentials, items you “must have” each month (rent, utility bill, groceries, etc.). A Want (entertainment, new clothes, going out, etc.) is something you would like to purchase after you have paid for your Needs. To avoid damaging your credit, pay off your Needs before planning how to spend for your Wants.

Here’s how to find how much you have for Wants:

• First, add up all of your monthly income. Monthly income includes money from work, scholarships, loans, grants, or allowances from family/friends
• Take your monthly income and subtract your Needs throughout the month, both fixed expenses and any variable expenses.
  • Fixed expenses include recurring bills like rent, car payments, or cable and internet bills that don’t generally fluctuate and are constant every month.
  • Variable expenses include cell phone bills, utilities, etc. in which the amount is a function of your usage and the monthly rate varies.
    
    

Once you have subtracted your Needs from your monthly income, you have your Wants amount of available cash remaining. Your Wants should be left over to cover anything you may want once all your needs are addressed. This category should cover trips to the movies, or going out on the weekends, and only allows you to spend a certain amount.. This way, you won’t lose control of your money and spend more than you realize.

First, estimate your income and expenses for this month. Then, track your actual income and expenses. Use your actual figures for this month to budget your income and expenses for next month. Determine which of your expenses are Needs and which are Wants so that you can realistically determine which expenses must be paid and which expenses you can cut back on. 

Download budget sheet

Housing

• Get a roommate.
  
  

Reduce utility costs.

• Disconnect your cable TV service.
• Turn off the lights when not in use.
  
  

Saving

• Put loose change in a jar; keep it for laundry or unexpected expenses.
  
  

Reduce your food expenditures.

• Buy house brand items.
• Shop once a week.
• Buy only what is on your list.
• Compare prices.
• Eat out less frequently and less expensively.
• Treat eating out as a luxury.
• Use restaurant coupons.
• Order entrees only, not expensive desserts or appetizers.
• Split or share meals with a friend.
• Learn to cook for yourself.
  
  

Find free or inexpensive ways to entertain yourself.

• Participate in sports.
• Check out local museums and parks.
• See matinee movies and/or seek discount movie tickets.
• Read a book.
• Rent DVDs.
  
  

Take care of yourself, but look for deals.

• Avoid memberships at trendy health clubs; take advantage of the Rec Center.
• Use coupons or specials for hairdressers and barbers.
• Don’t spend money on expensive cosmetics.
• Give yourself a manicure/ pedicure rather than paying someone else to do it.
  
  

Find an alternative to driving a car.

• Ride the bus, carpool with friends, ride your bicycle, and walk. If you must have a car, try to save money.
• Wash your car yourself.
• Purchase regular unleaded gasoline.
• Use coupons for oil changes.
• To avoid high-dollar expenses, keep your car in good condition.
  
  

Shop for clothes wisely.

• Shop at discount outlet stores, consignment stores and thrift shops.
• Avoid buying and wearing clothes that must be dry-cleaned.
• Shop for special long-distance and/or cell phone rates that meet your needs.
  
  

Check out the costs of banking.

• Avoid ATM fees, checking fees, designer checks, etc.