Budgeting 101 – Identifying Your Needs


The term need refers to something that is extremely necessary for a person to survive and function. This can include food, water, clothing and shelter. If these needs are not met, people can become sick and even die.

Needs are categorized into two groups: objective needs and subjective needs.

Objective needs, also called essential needs, are those that can be measured or objectively determined. These are things like nutrition, safety, and health care. They can be based on scientific evidence or societal norms.

Personal needs, on the other hand, are more subjective and can be based on emotional considerations. These needs can include the desire for self-esteem, a sense of security and social approval.

Identifying Your Needs

To effectively budget, you must first know what your needs are. Needs are the things that you must have to survive and function, while wants are things that you would enjoy but do not need. This distinction can help you save money and avoid spending more than you can afford.

It can also be helpful to look at your expenses using the 50/30/20 rule. This will allow you to keep your needs and wants separated so that you can plan for the future with a more balanced budget.

Need-aware Colleges

When you apply to colleges and universities, you may be required to demonstrate your financial need. In this case, the school will need to make a decision about whether it is in the best interests of its students to accept your application. The school will then use the information you provide to calculate your eligibility for financial aid.

The school might offer you a scholarship, tuition waiver or some other form of financial assistance to pay for your college education. This is because it wants to meet the needs of its students as a whole, without discriminating against applicants based on their financial situation.

You can easily figure out your personal needs by creating a list of your top four needs and then creating a plan to meet them. This can be as simple as taking a cooking class or buying a new hobby, or it can involve more in-depth planning that requires you to make a commitment.

Having a plan can also be an effective way to stay motivated when you’re trying to accomplish your goals. If you find that you’re getting frustrated with the process of making a plan, then it may be time to do some research into your needs and create a new plan to meet them.

How to Determine Needs and Wants

The most challenging part of separating your spending into needs and wants is distinguishing between what you need and what you want. This is especially true if you are new to budgeting or if you are used to having a lot of wants and not much needs. To help with this, think about how you spend your time and what you enjoy doing. Some activities and pursuits can seem like wants at first, but they are in fact needs for your happiness.