These handy Budget Worksheets are part of a financial planning series called How to Make a Budget. To start this series from the beginning, read the introduction.
What we want does not necessarily correlate to what we need. Sure, you may want that double crust pizza with extra cheese and double pepperoni, but what your body really needs for healthy sustenance are wholesome calories from fruits and veggies. It’s a bummer, I know.
Just like keeping a food diary or tracking your exercise with a workout log to get physically fit, writing down your needs and wants on a list can help keep you on the right fiscal track.
|How to Make a Budget:|
I’m including these Needs and Wants List Worksheets in this series to give you pause for thought when you’ve got some extra cash and need a reason to spend it on the important things in life. And no, those sexy three-inch Jimmy Choo stilettos advertised in Vogue don’t count. Sorry. But yeah, I liked them too.
Needs, Wants, and Goals Oh My!
So how are needs, wants, and goals different? Good question.
Goals: The Three Goal Setting Worksheets from earlier in the series are intended for your biggest plans, such as paying down debt or saving for a big purchase. Your goals probably take time to accomplish and may require lots of saved cash.
Needs: Your needs are pretty basic in life. Food, shelter, and simple clothing are all things you need. Designer jeans and a penthouse view may fall within the clothing and shelter category, but you aren’t going to freeze your arse off if your denim is not branded Calvin Klein. And not being able to see Russia from your window won’t kill you either. Living in a street-level apartment costs less and keeps you out of the cold.
Wants: Your wants are the fun things in life. These are the things you spend your discretionary cash on after paying the bills, dealing with debt, and feeding your family. I may be a fanatical frugalist, but I have wants too. My wants are those wish list items I dream about. A new iPod, a faster computer, and a trip to Europe are all things I’ve listed on my wishful want list.
Budgeting with Your Needs and Wants List
The main reason for keeping a Needs and Wants List is to prioritize purchases and prevent impulse spending. If you stumble upon a sale while breezing through the mall, it’s easier to consult your list and make a buying decision based on documented needs versus wants. Let the list decide, and keep your emotions out of it.
Download: Your Needs and Wants List
Here’s how to use it:
- Make a list of items for purchase.
- Date each item.
- Determine if the item is a need or a want.
- Suggest a store for purchasing the item.
- Estimate or track the cost.
I asked the Squawkfox fans on Facebook if they kept a needs and wants list, and many do. I think Laura says it best:
I think that the key part about a list is using it as a thought-deposit-slot. If I am inspired to buy something and write it on the list, I can stop actively trying to remember to buy it — and thus put it out of my mind. If I forget about it entirely until I see it on the list several days or weeks later, then I know I can just cross it off as unnecessary.
I’d estimate that I cross off and don’t purchase about 75-90% of the things I put on that list, then am usually very happy with the few items I do buy. It also pulls double duty as a comparison shopping tool — as I narrow my wants/needs down to the few really important items, I am also comparing prices in stores, and can refer back to those quick price notes when checking online if it’s a more expensive item.
Check out Squawkfox on Facebook for more real budgeting ideas.
Get Your Kids Budgeting Too!
If you’ve got kids, now is a good time to get them on board with your new family budget. Kids want and need stuff too, so it pays to get the kidlets thinking about what they really need compared to wistful wants.
The forces of TV advertising, blinking internet sites, and other school-aged kids that seem to have everything can be strong pulls on your purse strings. So having a tool to help curb your child’s impulse wants early in life can give you some financial relief while teaching an important lesson — money doesn’t grow on trees and you can’t always get what you want today. Sad, I know. Boo hoo.
Besides, getting your kids to decide what is needed and what is wanted early in life can pay dividends when they’re adults. The sooner financial lessons are started, the more savvy your kids will grow up to be when it comes to using credit cards, spending, and saving.
Kids also want to be included in “big people” matters. So if you’ve got one or more kids, give them each a list and let them decide what goes on it. If you’re not shy about your own Needs and Wants List, then show it to them! Make budgeting a family affair and lead by example.
Download: Needs and Wants List for Kids
Here’s how to get your kids involved:
- Sit down with your kids and explain the differences between needs and wants.
- Make it fun by using crayons, paint, whatever.
- Get your child to make their list.
- Help them determine if the item is a need or a want.
- Let your child suggest a store for purchasing the item.
- See if they can estimate the cost for each item.
- If your child is old enough for an allowance, show them how long it will take to earn enough allowance to pay for each item.
When money is available — either from allowances or birthday money — let your kid decide what to buy based on their list. Have them review their priorities and decide based on cost and reason, rather than impulse spending. You may just find that having a “wish list” keeps the whole family’s spending in check.
Your Two Cents: Do you keep a needs or wants list? Do you teach your kids about money?