Need To Trim a Tight Budget? Get Honest About Wants Vs. Needs

by Andrea Norris-McKnight

When facing economic uncertainty and tight budget constraints, distinguishing between essential and discretionary expenses — wants and needs — is more than a financial strategy. It’s a crucial survival skill that can help you get by until your financial situation improves.

Perhaps you’ve trimmed your budget to its bare bones and still can’t get much financial relief. You might be blurring the line between wants and needs. Sometimes, this is unintentional. Wants can often be disguised as needs. But sometimes, you aren’t willing to give up some wants, even temporarily, to fix your finances.

It’s time to get honest about wants vs. needs if you’re struggling to reduce a tight budget. Here’s a look at the fine line between the two and how to spot and trim the ‘wants’ still hiding in your budget.

Wants Vs. Needs: The Simple Difference

On the surface, the difference between wants and needs is simple.

A ‘need’ encompasses the essentials for basic survival and functioning in society. These include shelter, food, clothing, healthcare, and, in many cases, transportation and even education.

On the other hand, ‘wants’ are those items or services that enhance our life experience but are not essential for basic survival. Wants might include dining out, high-end electronics, fashionable clothing, vacations and entertainment.

When it comes to cutting the budget, the difference between wants and needs isn’t so straightforward. You likely have ‘wants’ hiding within those budget categories typically considered ‘needs.’

Finding the Hidden Wants in Your Budget

Consider the line items in your budget (hopefully, you have a budget). You have categories for Food, Electric, Water, etc. These things are all ‘needs.’ When analyzing your budget for ‘wants’ to trim, you probably overlook these categories. But that doesn’t mean every drop of water or kilowatt of electricity you use or bite of food you eat is needed.

Suppose you have a big garden-style bathtub you like to soak in each night after work or a high-pressure showerhead you stand under until the water runs cold. Yes, you need to bathe, but any water you’re using beyond washing your body and hair is technically a ‘want’ rather than a ‘need.’ In this example, shorter showers or fewer tub soaks could lower water and electric bills.

How much food do you buy each week that isn’t really needed? Restaurant food is a ‘want,’ and you’ve probably already cut that from your tight budget, but you likely have more cutting you can do at the grocery store. The next time you grocery shop, check your receipt to see how many items you bought that you didn’t need — extra snacks, that bottle of wine, that new flavor of coffee creamer that wasn’t on sale. You might find you could reduce your grocery bills by 10% to 20% until your budget improves.

We all need toiletries – shampoo, conditioner, soap. But that expensive salon shampoo is a ‘want.’ What is needed is the brand on sale at Walmart.

Related: Could Acquired Needs Theory Save You Money?

The Impact of Honest Self-Assessment of Wants vs. Needs

Taking an honest look at your wants and needs sometimes requires looking beyond those high-level ‘need’ budget categories and scrutinizing every little expense to determine whether it is something you can’t do without or merely a momentary pleasure.

It also may require a hard reality check. Sometimes, finding ‘wants’ in the budget isn’t easy, but cutting them can be downright hard. No one wants to give up life’s pleasures, even if, logically, you know you’ll barely make rent next month. Just remember that it’s only temporary. You can gradually add discretionary spending back into the budget as your financial situation improves.

Related:

• 12 Ways To Cut Spending to the Bone
• 10 Ways To Prevent Non-Essential Spending
• Using Opportunity Costs To Live a Happier Life

Reviewed June 2024

About the Author

Andrea Norris-McKnight took over as the editor of The Dollar Stretcher and After 50 Finances after working under the site founder and previous editor for almost 15 years. She has also written for Money.com, GOBankingRates.com, HavenLife.com and The Sacramento Bee.