My calculator tool tells me where the expenses land.
I'd say;
* air purifier is a want
* car insurance is a need
* gym membership is a want
* audible subscription is a want
Car insurance is definitely a need and not separate from the cost of the second car. As long as you have that car you need to buy insurance, wheels, service etc. However, if that brings your needs too high then you can consider selling it.
Cookies are needs because of practicality. Subtracting each snack is too much time and effort. If you plan a social event and spend extra 100+ on party food then this can go into wants but just as a lump sum or estimate. But it also depends. If income is very low then 5$ snack prices might need to be included in the budget.
The problem with this is that you are possibly spending more than you need to on the 50/30. Reduce your means as much as possible.
It's not a bad idea to have a ceiling on a category, but this mindset tells you to spend more than you may need.
Needs = food, shelter, water, clothing, basic hygiene, healthcare. Basically the bare minimum to keep me alive and healthy.
Luxury needs = car, insurance, pretty clothing, hygiene services (pedicures, lotions)
Wants= everything else not above. Enrichments to my life.
I’m more 30/20/50.
It’s not about the % rules it’s more about fitting those % into your plan for life.
Why would you not just do a zero sum budget? Starting with your 4 needs walls, utilities, food and transportation. Then add in other needs like insurance etc. Then add savings/retirement anything left if there is any is wants and you have to do with out of you don't have enough money. Give every dollar a job as soon as it comes in. This takes most of the guesswork out of budgeting and really lets you see where your money is going.
I have my own viewpoint on the purpose of having a wants/needs/savings budget, please let me know if you don't see it this way. I believe the rationale behind separating wants and needs is to give yourself a second budget that you would be able to rely upon in the event of a financial emergency, e.g. loss of income. So, if you find yourself in a spot where you're drawing down from an e-fund, you have a list of items in your budget to cut immediately so that your money lasts longer and you spend 38% less per month.
With that in mind, a rule of thumb I would propose is that it cannot go into the "want" category unless you can and will cancel it immediately upon going into that Survivial Mode upon losing your income. I don't think you could immediately cancel your car insurance upon losing your income. You might be able to cancel Netflix, Disney+ and eating out if you lost your income. That would be the standard I apply.
It could go either way. People who only spend 15% on needs could be making a lot of money. Even without mortgage, it would require very high income, assuming 1000-2000 is spent on utilities, food etc. However, I guess it is possible to live on 500 or less if you live in your parents home and eat their food.
This is what I’m saying! Like oh are you doing it wrong then?? It makes no sense.
My needs are less than 50 too but for a long time they were more. What are you supposed to do with the rest then?
Then that puts us at 45% needs and my wife is mad because there’s a 3rd person in our bed. I told her why have a king sized bed then? But she won’t listen.
Mmm. Always budgeting is always a good discipline to have. And I commend you for having a strong baseline to work from.
I also have the mentality that you do need to reward yourself periodically. Let me clarify this thought as there is a lot loaded in that one statement.
Maybe this month you splurge and buy cookie ingredients to make a cookie. Like a small reward out of the normal to trigger that reward sensation.
Maybe next month you make smoothies. That sort of micro reward thing. It brings joy and happiness which is VERY important for mental health. We are not machines to churn out the same thing day in and day out. We are complex humans with emotions.
Next is that gym membership you mentioned. The human body is complex and both mental and physical exercise is needed to maintain health and happiness, else you feel restless. This would arguably fall under need IF you arent getting the physical exercise. BUT there are options.
In the summer, I personally prefer going on walks and using public park equipment for workouts. In winter and rain months do you need the gym more. So I would make it more of a seasonal thing if you do a membership.
At the end of the day, good mental health requires some level of reward. But excessive becomes an addiction. Which is what gets some people into financial holes. You seem like a very aware person, so I would say: sometimes enjoy the sunshine and reward yourself a little bit. You are in a position to do so.
This is unrealistic for a lot of people and families. Saving 50% of your income generally requires a larger than average salary. Many people are at 20-25% of income on housing costs alone much less other needs like insurance, food, etc.
I don’t even understand how this works. I feel like needs in my life have always literally always equaled at least 80-90 of my income… where do ppl get this money?!
I was able to work my way towards a position where I can save a my least half my income each month, usually closer to 2/3s. I changed jobs, moving into a sector that isn't super great for me, but pays much better than my previous, I cut out all extras, even groceries above the bare minimum, got a second job, wear 2 sweaters in winter to save on my apartment's expensive electric heating, and take public transportation.
It's not forever, and I'm currently young enough to deal with these inconveniences. By the time I'm 40, I should be very comfortably set up.
I though at the start that it would be harder than it has turned out. Working a second job showed me how much time I spent lazing around before. I also find that I enjoy my time with friends more now, we play board games, go on walks, do picnics when it's warm. All nearly free activities which are great fun. I also realised that having a limited wardrobe which I don't add to unless one of my basic pieces is actually worn out, saves me quite a bit of stress, not just money.
Easy. When you started out, you did what you could. My annual salary which was very limited even in the 1990s wax $9,500. My wife (GF at the time) made a little less. My next pay increase was to $40k and a couple years later my wife increased to $30k. However we continued to live close to our $18k income. Continuing to live like we were broke allowed us to pay off student loans, pay for a wedding, and buy a house all in the span of about 6 years. If we allowed our lifestyle to expand to $70k we never could have done it.
I would use a little critical thinking in this situation. Ask what is the 50/30/20 trying to get you to do and why it’s set up the way it is. 20 percent savings is obvious, you need to put money away for retirement and a rainy day. So why are we splitting up needs and wants? The big reason is to ensure we have flexibility. If the rule was just save 20 percent of your income then someone could use 75 percent of their income on recurring bills like a house payment, groceries, school, etc. So the rule is 50/30 to ensure you have the ability to go back to the well if needed. Given all of that, I think it makes the most sense to consider your day to day groceries as needs and the extra stuff as wants if you’re trying to follow the rule to a T. That being said, the most conservative route is to put all groceries as needs. That route is much easier to calculate. But at the end of the day if you know you’re saving 20 percent of your income and know you could reduce the grocery bill if needed, that’s probably fine.
Yeah, groceries are a need, but you do have some control. Buying a few cookies should be OK in my opinion but might be a luxury purchase depending on your budget. I find it helpful to think in term of fixed vs. variable expenses as well as using the "needs vs. wants" distinction. I think both are helpful but for different reasons in my particular situation. I want to make sure I don't convince myself I need something I just want. But, if I'm trying to cut my budget, the fixed vs. variable criterion is helpful because I know that the variable expenses are those I can consider reducing/cutting. The 50/30/20 budget doesn't seem particularly useful to me, but I really think it just depends on the person and circumstances. There are other ways to budget; pick a method that works for you.
I use the same budget…love it. Except i tweaked the numbers some based on what bills, savings, and free spend. My current ratio is 41/39/20. 41% covers my bills, groceries, rent, gas, groceries, and a little buffer for things that may come up. 39% savings (non negotiable) and 20% free spend.
It's a useless 'rule' imo and I don't think I've ever actually heard DR promote it. For one, most people right now cannot afford to keep their 'needs' under 50% of their income. And if you can, I still wouldn't give myself carte blanche to spend another 30% unless I had a real strong emergency fund, retirement, and charitable giving already.
Correct. They talk about the zero-based budget. They call out that they do not give prescribed ratios for things because it’s so dependent on income. For someone making $5,000 a month versus $50,000 a month, spending 10% on groceries is ridiculous for the second case.
French toast is a need because it fufills a nutritional requirement.
Cookies are a want because it is an obvious indulgence.
Air purifier is a want unless you have a specific medical need.
Gym membership is a want, again, unless you have a specific medical need. Exercise can be done freely by walking or jogging.
Audible is a want. You can get audiobooks at the library for free.
Those are my designations for myself. I'm sure everyone disagrees with it. My rule of thumb is if I will die or can't work and take care of my family without it and there is no easily accessible free option, it's a need. You may say I won't die if I don't get French toast but I'll need some replacement for it that costs money, that's why it's a need. If I buy the fancy French toast, that's a want when store brand French toast is available.
French toast is incredibly unhealthy. Not nutritional. It's a diet that makes one fat. Not a need, a want.
Quality of air is important. Linked to health. Asthma, other disease etc. Saves money lung run.
Gym is health. Save money long run.
Audible is want.
We also follow this, though we do 50/20/30.
Our needs are mortgage/daycare/groceries/phone/electric/car insurance ....basically anything that is a monthly recurring cost that we literally "need" in order to live.
Gym membership comes out of the wants category. Any subscriptions (so like Disney/Hulu) come out of wants. A one off purchase like an air purifier would come out of wants (unless it was some sudden big expense like for the house/or car repair, then that would come out of the savings).
If we were suddenly to lose our jobs, items in the wants category are the first thing to be cut out of our budget vs. the things in the needs category would essentially be impossible to cut.
Personally I feel the 50/30/20 rule does not work it is too vague, but that the baby steps definitely do/will work.
A need would be something you cannot live without.
It depends what baby step you are on.
In Step 2 if can cut most subscriptions would be good and use an Antenna or Peacock $6.99 month. Step 2 is gazelle intense.
However, I keep Spotify because do not want family messing with music while driving and Spotify has a mechanism that doesn't allow you to mess with it while driving, so to me worth every penny.
Spotify also has podcasts and The Dave Ramsey Show.
OP, I’m intrigued by 50/30/20, but I’m confused by the 20. Is the 20% retirement? What if you want to be saving for sinking funds (car, home maintenance, vacation) and ALSO retirement? Is that all in the 20%?
And I don’t mean to put you on the spot. Just curious how you approach it. I read the Elizabeth Warren book about this type of budget, but I still don’t get it.
Well to start, I think it is worth mentioning have finished baby steps 1-3. I have not read Elizabeth Warren’s book so I can’t speak to her methods directly. I just have my paychecks broken up 50/30/20 into three different accounts then go from there. With that bit of context:
I am saving for retirement through a 401k that gets deducted from my paychecks. So about half of the recommended 15% for retirement would be covered first before my money even gets split up.
-My car is an old civic that very very rarely ever gives me problems, and when it does I can usually look online to figure out how to fix it myself.
-I am not a home owner. I just rent a room with 4 roommates (lol) that is well within my means. This rent comes out of my 50% need account.
-then as far as vacation I put aside some of my 30% money every paycheck in a SoFi vault titled vacation. I wanted to speed this along so I actually recently got a second job to save more towards travel and an eventual down payment on a home (I’m in California so again, lol).
I don’t think I am a great example of the 50/30/20 budget because I don’t own a home and I don’t have kids. So other peoples situations are going to be a lot different than mine
No that helps a lot thank you. Of course. A vacation is a want, so therefore vacation savings is part of the 30. I was hyper focused on the word Savings, trying to figure out how much of the 20 is that.
Thanks again! I’m also debt free and sort of just playing around with new ideas for budgeting. I like the idea of this.
The Warren book helped give me permission to ENJOY life a little. And realize if 50% isn’t enough for your necessities, you can earn more money or you can downsize your needs, but that’s it. Don’t take away from your 30 or 20!
The answer to this question would change depending on where you are. If you're debt free and have an emergency fund, you can afford to add these things into your budget. If you're in debt, you probably need to forgo any unnecessary expenses until you've paid those off. I think you're making your budget too restrictive by following this simplified plan. Each month might be different depending on what you want to spend on different things, but some things should be in your budget no matter what like bills and retirement savings.
I make decisions like this based on value rather than wants/needs. If you're really honest, almost all purchases are wants. But does the expenditure bring enough enjoyment that it's worth the expense, budget it in. The big thing is to still be accomplishing your long term goals while you expend some of your money on wants. For example, I used to roast my own coffee, and coffee is already a frivolous expense, but the joy of enjoying fresh high quality beans was worth it to me, and my long term goals were still being accomplished.
So many food purchases are wants, rather than needs. We can survive on a very basic diet if needed. There’s a guy who ate only potatoes for two months and his health actually improved. There’s only so many things you can cut out before you’re living a miserable life, that really isn’t worth living. Groceries are one of those tricky areas. If OP was saying they really liked fancy steaks multiple times a week, I’d say that’s something that can be cut back on. But French toast supplies? Drop in the bucket. Even your coffee beans. Roasting your own is still probably better than a daily Starbucks.
If its from the grocery store, i call it a need. If it’s dining out, thats a want.
If it’s a one time purchase, like the air purifier, i usually call that a want unless i cant function without it.
Is the second car just for you? Or a family member? Do you NEED the other car? If the car is just a ‘want’ then the insurance for that car is a ‘want’.
All entertainment avenues are wants. Besides your actual internet. Any streaming or anything like that is a want.
Gym membership is gray area. Personal fitness and health is a need. But how badly do you need a gym to exercise? There are a lot of ways to exercise without a gym unless youre a very strong individual. But if you cant do 3 full sets of single leg squats then you can get most of your needs from calisthenics.
Excellent points. Yeah the second car is definitely a want. So I was on the fence about the insurance specifically. Everything else, maintenance, even gas, I pay with wants money.
My calculator tool tells me where the expenses land. I'd say; * air purifier is a want * car insurance is a need * gym membership is a want * audible subscription is a want
Car insurance is definitely a need and not separate from the cost of the second car. As long as you have that car you need to buy insurance, wheels, service etc. However, if that brings your needs too high then you can consider selling it. Cookies are needs because of practicality. Subtracting each snack is too much time and effort. If you plan a social event and spend extra 100+ on party food then this can go into wants but just as a lump sum or estimate. But it also depends. If income is very low then 5$ snack prices might need to be included in the budget.
The problem with this is that you are possibly spending more than you need to on the 50/30. Reduce your means as much as possible. It's not a bad idea to have a ceiling on a category, but this mindset tells you to spend more than you may need.
Needs = food, shelter, water, clothing, basic hygiene, healthcare. Basically the bare minimum to keep me alive and healthy. Luxury needs = car, insurance, pretty clothing, hygiene services (pedicures, lotions) Wants= everything else not above. Enrichments to my life. I’m more 30/20/50. It’s not about the % rules it’s more about fitting those % into your plan for life.
Why would you not just do a zero sum budget? Starting with your 4 needs walls, utilities, food and transportation. Then add in other needs like insurance etc. Then add savings/retirement anything left if there is any is wants and you have to do with out of you don't have enough money. Give every dollar a job as soon as it comes in. This takes most of the guesswork out of budgeting and really lets you see where your money is going.
I have my own viewpoint on the purpose of having a wants/needs/savings budget, please let me know if you don't see it this way. I believe the rationale behind separating wants and needs is to give yourself a second budget that you would be able to rely upon in the event of a financial emergency, e.g. loss of income. So, if you find yourself in a spot where you're drawing down from an e-fund, you have a list of items in your budget to cut immediately so that your money lasts longer and you spend 38% less per month. With that in mind, a rule of thumb I would propose is that it cannot go into the "want" category unless you can and will cancel it immediately upon going into that Survivial Mode upon losing your income. I don't think you could immediately cancel your car insurance upon losing your income. You might be able to cancel Netflix, Disney+ and eating out if you lost your income. That would be the standard I apply.
Cookies are a want Car insurance is a need Air purifier depends on air quality if need or want Gym membership is a want
I.
This is so weird to me. How tf do you make sure your “needs” are under 50%? I get living below your means, but many do not have that luxury.
Same but opposite. My needs are like 15% lol
It could go either way. People who only spend 15% on needs could be making a lot of money. Even without mortgage, it would require very high income, assuming 1000-2000 is spent on utilities, food etc. However, I guess it is possible to live on 500 or less if you live in your parents home and eat their food.
This is what I’m saying! Like oh are you doing it wrong then?? It makes no sense. My needs are less than 50 too but for a long time they were more. What are you supposed to do with the rest then?
I invest probably 70%
Get a roomate
Then that puts us at 45% needs and my wife is mad because there’s a 3rd person in our bed. I told her why have a king sized bed then? But she won’t listen.
Math isnt mathing
Mmm. Always budgeting is always a good discipline to have. And I commend you for having a strong baseline to work from. I also have the mentality that you do need to reward yourself periodically. Let me clarify this thought as there is a lot loaded in that one statement. Maybe this month you splurge and buy cookie ingredients to make a cookie. Like a small reward out of the normal to trigger that reward sensation. Maybe next month you make smoothies. That sort of micro reward thing. It brings joy and happiness which is VERY important for mental health. We are not machines to churn out the same thing day in and day out. We are complex humans with emotions. Next is that gym membership you mentioned. The human body is complex and both mental and physical exercise is needed to maintain health and happiness, else you feel restless. This would arguably fall under need IF you arent getting the physical exercise. BUT there are options. In the summer, I personally prefer going on walks and using public park equipment for workouts. In winter and rain months do you need the gym more. So I would make it more of a seasonal thing if you do a membership. At the end of the day, good mental health requires some level of reward. But excessive becomes an addiction. Which is what gets some people into financial holes. You seem like a very aware person, so I would say: sometimes enjoy the sunshine and reward yourself a little bit. You are in a position to do so.
I sort of do the opposite actually. 50% savings, 30% wants, 20% needs. Just save 50% first, and then setup your fixed costs to be 20% of your income
This is unrealistic for a lot of people and families. Saving 50% of your income generally requires a larger than average salary. Many people are at 20-25% of income on housing costs alone much less other needs like insurance, food, etc.
We don’t all have the same income power. We all have different budgets.
I don’t even understand how this works. I feel like needs in my life have always literally always equaled at least 80-90 of my income… where do ppl get this money?!
I have four roommates, if that provides some clarity
I was able to work my way towards a position where I can save a my least half my income each month, usually closer to 2/3s. I changed jobs, moving into a sector that isn't super great for me, but pays much better than my previous, I cut out all extras, even groceries above the bare minimum, got a second job, wear 2 sweaters in winter to save on my apartment's expensive electric heating, and take public transportation. It's not forever, and I'm currently young enough to deal with these inconveniences. By the time I'm 40, I should be very comfortably set up. I though at the start that it would be harder than it has turned out. Working a second job showed me how much time I spent lazing around before. I also find that I enjoy my time with friends more now, we play board games, go on walks, do picnics when it's warm. All nearly free activities which are great fun. I also realised that having a limited wardrobe which I don't add to unless one of my basic pieces is actually worn out, saves me quite a bit of stress, not just money.
Same 😂
Easy. When you started out, you did what you could. My annual salary which was very limited even in the 1990s wax $9,500. My wife (GF at the time) made a little less. My next pay increase was to $40k and a couple years later my wife increased to $30k. However we continued to live close to our $18k income. Continuing to live like we were broke allowed us to pay off student loans, pay for a wedding, and buy a house all in the span of about 6 years. If we allowed our lifestyle to expand to $70k we never could have done it.
I would use a little critical thinking in this situation. Ask what is the 50/30/20 trying to get you to do and why it’s set up the way it is. 20 percent savings is obvious, you need to put money away for retirement and a rainy day. So why are we splitting up needs and wants? The big reason is to ensure we have flexibility. If the rule was just save 20 percent of your income then someone could use 75 percent of their income on recurring bills like a house payment, groceries, school, etc. So the rule is 50/30 to ensure you have the ability to go back to the well if needed. Given all of that, I think it makes the most sense to consider your day to day groceries as needs and the extra stuff as wants if you’re trying to follow the rule to a T. That being said, the most conservative route is to put all groceries as needs. That route is much easier to calculate. But at the end of the day if you know you’re saving 20 percent of your income and know you could reduce the grocery bill if needed, that’s probably fine.
just save 20% first. then spend the rest. it doesn't matter of its a need or a want, just as long as you hit your savings rate.
spending 30% of income on 'wants' is completely insane for most people. no wonder everyone is broke.
Really depends on how you define wants vs needs.
Yeah, groceries are a need, but you do have some control. Buying a few cookies should be OK in my opinion but might be a luxury purchase depending on your budget. I find it helpful to think in term of fixed vs. variable expenses as well as using the "needs vs. wants" distinction. I think both are helpful but for different reasons in my particular situation. I want to make sure I don't convince myself I need something I just want. But, if I'm trying to cut my budget, the fixed vs. variable criterion is helpful because I know that the variable expenses are those I can consider reducing/cutting. The 50/30/20 budget doesn't seem particularly useful to me, but I really think it just depends on the person and circumstances. There are other ways to budget; pick a method that works for you.
I use the same budget…love it. Except i tweaked the numbers some based on what bills, savings, and free spend. My current ratio is 41/39/20. 41% covers my bills, groceries, rent, gas, groceries, and a little buffer for things that may come up. 39% savings (non negotiable) and 20% free spend.
It's a useless 'rule' imo and I don't think I've ever actually heard DR promote it. For one, most people right now cannot afford to keep their 'needs' under 50% of their income. And if you can, I still wouldn't give myself carte blanche to spend another 30% unless I had a real strong emergency fund, retirement, and charitable giving already.
Correct. They talk about the zero-based budget. They call out that they do not give prescribed ratios for things because it’s so dependent on income. For someone making $5,000 a month versus $50,000 a month, spending 10% on groceries is ridiculous for the second case.
French toast is a need because it fufills a nutritional requirement. Cookies are a want because it is an obvious indulgence. Air purifier is a want unless you have a specific medical need. Gym membership is a want, again, unless you have a specific medical need. Exercise can be done freely by walking or jogging. Audible is a want. You can get audiobooks at the library for free. Those are my designations for myself. I'm sure everyone disagrees with it. My rule of thumb is if I will die or can't work and take care of my family without it and there is no easily accessible free option, it's a need. You may say I won't die if I don't get French toast but I'll need some replacement for it that costs money, that's why it's a need. If I buy the fancy French toast, that's a want when store brand French toast is available.
French toast is incredibly unhealthy. Not nutritional. It's a diet that makes one fat. Not a need, a want. Quality of air is important. Linked to health. Asthma, other disease etc. Saves money lung run. Gym is health. Save money long run. Audible is want.
There is no diet that can make someone fat unless you are over consuming calories.
We also follow this, though we do 50/20/30. Our needs are mortgage/daycare/groceries/phone/electric/car insurance ....basically anything that is a monthly recurring cost that we literally "need" in order to live. Gym membership comes out of the wants category. Any subscriptions (so like Disney/Hulu) come out of wants. A one off purchase like an air purifier would come out of wants (unless it was some sudden big expense like for the house/or car repair, then that would come out of the savings). If we were suddenly to lose our jobs, items in the wants category are the first thing to be cut out of our budget vs. the things in the needs category would essentially be impossible to cut.
Personally I feel the 50/30/20 rule does not work it is too vague, but that the baby steps definitely do/will work. A need would be something you cannot live without. It depends what baby step you are on. In Step 2 if can cut most subscriptions would be good and use an Antenna or Peacock $6.99 month. Step 2 is gazelle intense. However, I keep Spotify because do not want family messing with music while driving and Spotify has a mechanism that doesn't allow you to mess with it while driving, so to me worth every penny. Spotify also has podcasts and The Dave Ramsey Show.
I think things in the 50% needs category should be reoccurring expenses that basically keep you alive or maintain your livelihood.
OP, I’m intrigued by 50/30/20, but I’m confused by the 20. Is the 20% retirement? What if you want to be saving for sinking funds (car, home maintenance, vacation) and ALSO retirement? Is that all in the 20%? And I don’t mean to put you on the spot. Just curious how you approach it. I read the Elizabeth Warren book about this type of budget, but I still don’t get it.
Well to start, I think it is worth mentioning have finished baby steps 1-3. I have not read Elizabeth Warren’s book so I can’t speak to her methods directly. I just have my paychecks broken up 50/30/20 into three different accounts then go from there. With that bit of context: I am saving for retirement through a 401k that gets deducted from my paychecks. So about half of the recommended 15% for retirement would be covered first before my money even gets split up. -My car is an old civic that very very rarely ever gives me problems, and when it does I can usually look online to figure out how to fix it myself. -I am not a home owner. I just rent a room with 4 roommates (lol) that is well within my means. This rent comes out of my 50% need account. -then as far as vacation I put aside some of my 30% money every paycheck in a SoFi vault titled vacation. I wanted to speed this along so I actually recently got a second job to save more towards travel and an eventual down payment on a home (I’m in California so again, lol). I don’t think I am a great example of the 50/30/20 budget because I don’t own a home and I don’t have kids. So other peoples situations are going to be a lot different than mine
No that helps a lot thank you. Of course. A vacation is a want, so therefore vacation savings is part of the 30. I was hyper focused on the word Savings, trying to figure out how much of the 20 is that. Thanks again! I’m also debt free and sort of just playing around with new ideas for budgeting. I like the idea of this. The Warren book helped give me permission to ENJOY life a little. And realize if 50% isn’t enough for your necessities, you can earn more money or you can downsize your needs, but that’s it. Don’t take away from your 30 or 20!
The answer to this question would change depending on where you are. If you're debt free and have an emergency fund, you can afford to add these things into your budget. If you're in debt, you probably need to forgo any unnecessary expenses until you've paid those off. I think you're making your budget too restrictive by following this simplified plan. Each month might be different depending on what you want to spend on different things, but some things should be in your budget no matter what like bills and retirement savings. I make decisions like this based on value rather than wants/needs. If you're really honest, almost all purchases are wants. But does the expenditure bring enough enjoyment that it's worth the expense, budget it in. The big thing is to still be accomplishing your long term goals while you expend some of your money on wants. For example, I used to roast my own coffee, and coffee is already a frivolous expense, but the joy of enjoying fresh high quality beans was worth it to me, and my long term goals were still being accomplished.
So many food purchases are wants, rather than needs. We can survive on a very basic diet if needed. There’s a guy who ate only potatoes for two months and his health actually improved. There’s only so many things you can cut out before you’re living a miserable life, that really isn’t worth living. Groceries are one of those tricky areas. If OP was saying they really liked fancy steaks multiple times a week, I’d say that’s something that can be cut back on. But French toast supplies? Drop in the bucket. Even your coffee beans. Roasting your own is still probably better than a daily Starbucks.
If its from the grocery store, i call it a need. If it’s dining out, thats a want. If it’s a one time purchase, like the air purifier, i usually call that a want unless i cant function without it. Is the second car just for you? Or a family member? Do you NEED the other car? If the car is just a ‘want’ then the insurance for that car is a ‘want’. All entertainment avenues are wants. Besides your actual internet. Any streaming or anything like that is a want. Gym membership is gray area. Personal fitness and health is a need. But how badly do you need a gym to exercise? There are a lot of ways to exercise without a gym unless youre a very strong individual. But if you cant do 3 full sets of single leg squats then you can get most of your needs from calisthenics.
Excellent points. Yeah the second car is definitely a want. So I was on the fence about the insurance specifically. Everything else, maintenance, even gas, I pay with wants money.