Sometimes we find it challenging to fully comprehend how we ought to prioritize our spending. There are so many things we purchase that we don´t know where to begin. If we don´t approach it concretely, it can all become so confusing that we tend to shy away from thinking critically on how we can save. But it doesn´t have to be such a struggle. A very easy and tangible practice we can all do is take a look at our monthly bank statement and divide out our expenses into two categories: Needs and Wants.
Needs are simply the things that we buy on a monthly basis that are necessary for survival and are required as citizens. For example, a list of needs would include your rent, utilities, insurance, student loans, tithe, car payment, groceries, gas, etc. Your needs are the things that you must spend your money on. They take first priority.
Wants are the things you buy for pleasure. You are not required to buy these, but we buy them anyways because they are enjoyable. Examples of things on your list of wants would include Netflix, Spotify, monthly memberships, fast food, gaming systems, etc. All of these are good things, but they must not take precedence over the things on your list of needs. And, to take a crucial step further, your list of wants must not take precedence over your savings!
If you truly want to prioritize your spending well, take a good look at your list of wants. If you really want to start saving your money, there must be something on the list that you can take out. It doesn´t have to be all of your wants – that would be unhealthy. But be honest with yourself, and consider each expense on your list of wants and decide whether it is worth buying more than it is worth saving. You could save a lot more than you think if you simply cut back some.
For example, if you have an account for Netflix, Hulu, and Amazon Prime Video, what if you just pick one? That would save $10 to $20 a month, equaling out to $120 to $240 a year. Or, if youŕe a girl, getting your nails done every other month typically costs around $60 each time. What if you only got your nails done on special occasions? You would save up to $200 a year. Also, consider your monthly subscriptions such as Ipsy, StitchFix, or Burchbox. Each costing anywhere from $10 to $40 a month, you could save up to $480 a year depending on what youŕe willing to do without.
Again, we´re not financial experts, but we have done this practice ourselves. We cancelled our Netflix subscription because we already have Amazon Prime Video. Also, we no longer have a membership with a local spa, saving us another $60 a month. In total, we´re now saving $70 a month, giving us an extra $840 a year to add to our savings. That is an extra $840 all because we did without just two of our monthly expenses.
Remember, it´s up to you to decide what you would consider to be worth keeping on your monthly bill statement, but do take the time to seriously think about what is holding you back from saving your hard-earned money. Saving can be daunting, but identifying our needs from our wants sheds light on the potential of how we can save just by cutting out only a few of our wants.