No one necessarily LIKES to think about their finances. However, financial planning is pretty unavoidable. Julia Dellitt, author of GET YOUR LIFE TOGETHER(ISH), explains how you should track your wants versus needs when it comes to saving and managing your funds.
Now it’s time to take the previous challenge and make it more visual and tangible. For a whole week, ask yourself, “Want or need?” before every purchase, and then write it down somewhere—whether it was a want or a need, as well as how much you ended up spending—to create a money diary. Again, you don’t have to actually change the way you spend (yet!); you’re just paying close attention to how your spending shakes out and making note of it.
At the end of the week, tally up how many “wants” and “needs” you had and the resulting cost of each. (Try to be as “normal” with your financial habits as possible, since that’ll give you the truest picture of where you are.) Now look at your list. How many “wants”did you indulge in this week, and how much extra money did they end up costing you? You might be surprised how much of your hard-earned cash you let go of on things you didn’t necessarily need but just wanted to have in the moment. It can be eye-opening to see your purchases laid out like this. Also, be mindful of where you start rationalizing the difference between a want and a need. Do you really “need” that sweater, or are you just feeling the itch to spice up your wardrobe? Which purchases can wait, and which ones are seriously essential?
Review your spending for the past six months, and categorize every purchase as “want” or “need.” It’s okay if you don’t account for every single purchase; you’re just looking to see which way your spending habits lean. Tally up each column to see how much you spent, per month, on each. From there, set a goal to reduce your “want” spending by 25 percent (or more!), and set a reminder on your calendar to repeat the exercise.
Find out other life hacks in GET YOUR LIFE TOGETHER(ISH) by Julia Dellitt!
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Excerpted from Get Your Life Together(ish) by Julia Dellitt. Copyright © 2019 by author. Used by permission of the publisher. All rights reserved.