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Budgeting for Wants Not Just Needs

For many people, the idea of being on a budget is about as appealing as being on a strict diet. After-all who wants to cut out everything you enjoy? This not only sounds miserable it leads to unsuccessful budgeting for most people. The science of behavioral finance is gaining ground as a way of increasing financial well-being by creating a more reasonable approach to budgeting without the harsh cutbacks.

Mindset

Why It's Just As Important To Budget For Wants As It Is To Budget For NeedsIt is important to realize that budgeting is not just for people with no money, but rather a healthy budget is necessary for people in all income brackets. The path to financial success is not based on how much money passes through your hands, but how much you can hold onto and invest, so that it multiplies itself. Unfortunately, expecting to be able to cut all unnecessary funding out, and put every spare penny into savings has proven to be extremely difficult and punishing for most people. Instead, changing your mindset to allow yourself some amount of discretionary spending provides for a happier budgeting experience all around, and has a much higher success rate.

Celebrate Milestones

Even those who are extremely dedicated to sticking to a budget will occasionally find themselves wanting something a little extra. If you have placed yourself on a very strict budget to pay off all of your debts and left no room for your wants, the experience can be wholly disheartening. Imagine that your goal is to pay off all of your debt and buy a new car at the end of it all, but it will take you five years to actually achieve that goal. It is very difficult for most people to dedicate themselves to a plan that has such a long term reward without seeing any short-term victories. Instead, by setting shorter term goals and budgeting in small celebrations when these goals are met, you are more likely to stick to your plans.

Saving Money and Budgeting

Instead of cutting all the wants and extras, include some discretionary “play-money” spending in your budget. That way, you don’t have to feel guilty about getting something you may not really need. To have fun, you don’t need to be extravagant. There are many ways to save money when spending your “play-money”. For example, if your idea of fun is buying clothes, you can find great deals on your favorite clothing brands by using coupons from Discountrue.

On the other hand,  if your idea of fun is a night out there are ways to do do that on a budget as well. Recently my wife found a deal at our local grocery store that gave a free movie ticket if you bought 5 items from a specific list of about 30 items. We were able to buy 10 items and get two free tickets to a first run movie.

Speaking of first run movies… you can still have a nice “date night” by going to see movies that have been out a while. Most cities have theaters that show movies just before they are released on DVD. Often you can get tickets to these shows for a dollar or two. So a couple can go for a movie for only $4.00.

At the end of the day, we all need to feel rewarded for all of the hard work we do. People who budget too strictly tend to become easily discouraged and fail because they feel like they are working very hard and deserve to enjoy their money in the short term. By budgeting for wants and needs, you are able to find a middle ground budgeting strategy that allows for both short and long term success.