Part One- Needs Vs. Wants

Ever fail at a goal that required a budget and you can’t figure out why?

Before making any large purchase as a couple it’s best to sit down and start making some decisions. These are decisions that will affect your future goals. For us the first step was establishing a decent budget. My husband recently started a new job following his passion as a nurse in neurology. We had an increase in income and without a plan in place we magically had an increase in expenses. I don’t know what it is about most people but when we have more money we typically just spend more money. Our major purchase was a home and we needed to make some big changes in spending.

 

I realized early on that without a clear understanding of our needs verses our wants it’s a struggle to figure out how much to put in those beautiful little budget buckets. Our biggest problem, was all the extra money we spent on food! I was amazed when I finally sat down one month and determined how much was spent in grocery stores, farmers markets, and restaurants. The number was ridiculous, and I was a bit ashamed. I love food. I love growing food, shopping for food, cooking food. Growing up Italian our lives revolved around the next meal, so when I really thought about it I found I wasn’t too shocked.

Today I’m going to share with you part one of a three-part series on beginning your first budget. In today’s article you will find a few easy steps determine your needs vs. your wants.

Determining Needs Vs. Wants Exercise

This needs to happen before anything else. Without a clear understanding of what you family needs monthly, versus the wants you are going to continuously fail at following that monthly plan.

  1. The first step is to print out a monthly statement… you can get this through your online banking or from your bank branch if you are opted into online statements. (Print those credit card statements too if you are using them)
  2. Grab a bottle of wine, and get out your biggest pink marker and your biggest green marker (honestly the colors don’t matter, just have two)
  3. The next part is a bit eye opening. I want you to sit down and highlight all those needs in green, things like your mortgage, utilities, and car payment. You can even include groceries in this one. But after that I want you to highlight all the rest of your wants. Things like that awesome nail appointment, restaurants, that thrift store trip because you just had to get out of the house… you get the idea.
  4. Now is the fun part, if you have the time start adding up some of those consistencies you see in the wants category. Add up how much those Starbucks coffees are really costing you monthly. Your going to keep these numbers in mind when you establish your budget.

Time for a break…

Once this is done I want you to take a break. If you try and jump in unprepared then this will be tough for any couple. The purpose of this exercise is to have an idea of where your money is going. For my husband and I to buy our forever farmhouse, we needed to pay down a lot of debt and build up a pretty good savings account. We aren’t perfect, so we are not successful every month but it’s a start, and a plan and that is what we needed to be successful.

Stay tuned for Part Two: Stretching Your Paycheck!

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