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Don't Ignore Your 'Wants' When You Budget

Nearly every personal finance book, article, video, story, and course that I've ever seen will tell you to classify your expenses into two buckets; needs and wants. The first thing to go when you are putting together a spending or savings plan are the wants.


I'm here to tell you, though, throwing away all your 'wants' is does not lead to good financial health.


Wants Versus Needs


Traditional personal finance education focuses on separating expenses into needs and wants. For example, your rent or mortgage payment would be a need while your weekly happy hour with your friends would be a want. It makes sense that if all you had left was enough money to pay your rent or to go to the bar with your buddies, you should pay your rent. Your car payment is more important than new clothes. Your electricity bill needs to be paid for before you go check out that new restaurant. 


I fully believe that prioritizing our bills and savings is important. However, I don't think it's wise to ignore wants. 


Basic Human Needs


Humans have six basic needs, and every behavior we have is designed to meet one or more of these needs. Those needs are:

  • Belonging

  • Autonomy

  • Safety/Security

  • Self-Expression

  • Connection

  • Purpose

Our use of money supports these basic needs. For example, paying rent gives us safety, and possibly self-expression. Going out for weekly happy hour with our friends gives supports our need for connection, and maybe purpose. 


Wants = Strategies