It is important to manage your money wisely. With proper financial management, you can attain peace of mind, as you’ll be in a healthy financial state. In addition to ensuring life today, managing money wisely also helps secure your future.
You can start managing your finances wisely by prioritizing your needs, not wants. What differentiates the two? How do you prioritize needs?
Needs vs. Wants
What are needs?
Needs are things that are essential and cannot not exist in your daily life. Most needs are fixed, and you can predict how much money you spend from one month to another.
Some needs don’t cost a lot of money, while the others do. Clothing, transportation to work and the internet are some examples of needs that cost less, while food and housing cost more.
What are wants?
What about wants? Compared to needs, wants are not vital. If you don’t fulfill your wants, you can still survive.
Expenses related to wants can change at any time because it depends on the current want. Wants may be caused by emotional urges, such as buying new things and eating out at restaurants. There are wants related to entertainment or hobbies, such as traveling.
Why is It Important to Prioritize Needs Over Wants?
Because if you don’t act wisely, your wants can make you lose control. Having wants is normal. We all have wants and when they are fulfilled, we feel happy.
Unfortunately, many people are easily tempted to fulfill their wants. In the end, those wants begin to take control, especially over the use of money. Some people buy things they don’t really need just because they have spending urges. This is where the danger lies. They have a hard time deciding how much to spend and when to stop.
How to Differentiate Between Wants and Needs Using the Jago Pocket in the Jago Application
So you can understand clearly whether you spend more money on needs or wants, you can list down all your expenses and then classify them into Needs or Wants.
For expenses that fall into the Needs category, you can create a Pocket for each need in the Jago application. After that, you set the budget for each Pocket.
Next, you can focus on the Wants category. You evaluate your wants from the most important to the least important. You’ll soon find out whether you’ve spent too much money on wants all this time or not.
So that you don’t use up all the money to indulge in wants, you can choose only some of the most important wants. Just like needs, you create a separate Pocket for your wants. Of course, the budget for wants should be less than the budget for needs.
What’s so cool about using Jago as your financial management tool is that you can monitor whether you have used up the budget in each Pocket. If possible, you shouldn’t add more budget to your Wants Pocket. This way, you can wisely manage your money or finances.