Many people resist creating a budget, but this is an important tool to keep track of our finances. We often say to ourselves, I need it even though we actually mean I want it. When we decide to create a budget, one of the first things to consider is whether each item is a need or a want.
A need is something that is required or essential to our lives. Our physical needs include food, clothing, shelter and transportation. We also have psychological needs for safety and security for ourselves and our families.
Tony Robbins speaks of six needs: Certainty, variety, significance, connection, growth and contribution. Many of our activities are dedicated to meeting these needs.
A want is something desired. We focus on our wants once we have fulfilled our needs. These are things and experiences that enrich our lives and that we spend much of our time pursuing. Wants include our hobbies, activities with family and friends and things we do to fulfill ourselves.
A budget allows us to prioritize the spending on need and want activities. Once we have established what category our activities belong to, we know how to prioritize them.
Of course, we do not always prioritize rationally. We might spend on a want before a need from time to time but understanding the difference allows us to be conscious about what we are doing.
A budget is just one tool that can help in financial planning. A Certified Financial Planner (CFP) can help you work with your budget to establish the security and safety for your future. Give Les Merritt, CFP, a call today at (919) 269-8553 to get help with your financial planning. End the summer with a great plan that will keep you sheltered through your future summers and winters for years to come.
Source for Tony Robins concept: http://upliftconnect.com/six-basic-human-needs/