Step 3: Separate Needs from Wants
People spend impulsively for a variety of different reasons. If they’re in a good mood, they spend out of pleasure and to keep the good mood. If they’re in a bad mood, they spend to try and make themselves feel better. Some people spend in certain places or at certain times because they feel obligated to do so. Examples could include being on vacation, during special holiday seasons, when they’re with certain people, or while engaging in specific activities.
Impulse spending habits are often linked to stress levels. A little stress can be motivating but a lot of stress can put a heavy strain on your judgment and diminish your ability to make wise choices between needs and wants. If you would like to learn more about why you spend impulsively and what you can do to change your spending patterns, have a look at this.
The key to good money management is separating needs from wants. If you aren’t sure if an item is a need or a want, do without it for a period of time. If after that time you truly can’t live without it, it may be a need. However, even the essentials like shelter or transportation involve a want vs. need calculation. For instance, you may have evaluated all possible transportation methods for you to get to work and determined that you need to purchase a car. Fine, but which car you buy is another choice you make.
Do you buy the more expensive SUV that you want, or will a less expensive, more economical vehicle meet your need? Almost everything you buy involves a want vs. need determination and ultimately, how you make these choices will determine if you reach your goals or not.
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Step 2: Identify Income and
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Step 4: Design Your Budget
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Downloadable Interactive Budgeting Workbook
The steps you are going through on this page plus accompanying pages can also be viewed as an interactive PDF workbook. You can download a copy, which can be printed and filled out by hand, or you can download a fillable PDF version, which can be filled out and saved on your computer.
Feel free to share this resource with anyone you think could benefit from it.
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