By Anis Nadhirah
Take a look around your room. Can you identify which things you bought as a NEED and which were a WANT?
Even with a budget, it’s easy to get side-tracked in buying things simply because you thought it was cute or wanted to expand your collection. But, it’s important to learn which purchases are actually necessary.
First off, you should understand the differences of the two. Your NEEDs are typically what you require to live – food, water, housing, insurance, transport, clothing, and utilities. Your WANTs are everything else including that.
What do I mean by ‘including’? Shouldn’t it be separate?
Well, do you need a place to live? Yes. But do you need that huge expensive penthouse in KL if you’re a fresh grad living alone? That’s more of a ‘Want’.
Other than that, ‘Wants’ are things like entertainment, travel, memberships, and the like. You can live without it but, it does give you some self-satisfaction being able to afford it.
When you’re planning your personal finances, you should go through segmentation of what belongs where. Don’t get too emotional when doing this since that’s what makes the process confusing. It can easily turn your WANT into a NEED even though your budget says otherwise.
To start, pinpoint the items based on your lifestyle – the things you use on a daily basis immediately goes on the Need list. Next, go through the list and find which takes the priority. It could be food or transport; it’s up to you.
You then have to determine what’s the minimum and maximum you can spend for each item. If you use public transport for travel to campus, what’s the most you may spend? It could include e-hailing services for days you’re too lazy to wait for the bus or toll fares if you decide to drive that day. That list can be further used to build your budget and let you know what you can buy from your WANT list.
One thing to remember: label your expenses according to priority is a crucial part of budget tracking. When you fail to do so, you may end up selling your WANTs to cover your NEEDs. The last thing you want is to say goodbye to your precious collectable merch because you couldn’t pay your Internet bill or are starving when it’s not even a fasting month yet.