In this month of Financial Literacy, a discussion of financial priorities is key. Unfortunately, we usually can’t have everything we want at the same time. This is true at every income level.
So what is a way to help us prioritize? Defining our wants from needs is a great starting point. A Need is something that you need for basic living such as Housing, transportation, food and Insurance.
A want is something that makes our basic living better. This might be Travel, Entertainment, Hobbies, Designer clothes.
Have you ever thought about the difference? Do you need the new coat or just want it? Do you need a manicure or just want it? Do you need a new car or just want it?
This spreadsheet is a nice tool to think about your spending priorities. http://financialliteracymonth.com/30Steps/Step10.aspx
Once you have defined and added up your needs, you know what is left. Splitting your remaining income among saving and the remaining wants helps give you spending targets in each area.
Good luck in setting your priorities!