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Budgeting Needs vs. Wants

Updated: Mar 15

2 column chart with needs in the left column and wants in the right column. Under needs is "Things under ASSE which all you and your dependent(s) to stay alive, sheltered, solvent, employed. In the wants column is "almost everything else."

It’s important to categorize your spending or money flow as either a need or want. By doing so, you become more intentional about your spending, which helps ensure that you’re actually getting value from your spending. Otherwise, you could be spending money on things you don’t really care about. Being intntional about your spending also helps you achieve your financial goals. Finally, if you’re using a 50/30/20 budget (a.k.a 50/20/30 budget), you need to identify needs from wants.

Here is a lightweight framework to identify needs versus wants: anything that keeps you (A)live, (S)heltered, (S)olvent, and (E)mployed is a need. The acronym ASSE may make it easier to remember. Almost everything outside of ASSE is a want. Here are some examples:

  • (A)live: groceries, heating, electricity, health, dental, and vision insurance

  • (S)heltered: primary housing

  • (S)olvent: paying the minimum on debt and loans

  • (E)mployed: things you need to keep your job or find a job like transportation, gas money to and from work, car insurance, internet if you work from home, and work appropriate attire if applicable

ASSE is a good framework for needs because all of its items allow you and your dependents to have basic physical, mental, and financial health. With these three things, you help defend your life from getting worse and set the foundations for your life to get better over the long run. For example, not paying at least the minimum on your debt can lead to penalties and a worse credit score that in turn could lead to higher interest rates on all future loans. This in turn can lead to less savings, a later retirement, less desirable house or car, or decreased spending on wants.

There are items that are very close to needs but may still be wants. For example, tuition for your children and savings for your retirement. Needs and wants will vary from person to person and even from yourself at different points in time. You’ll need to make the call for these sensitive items. However, remember the more disciplined you are about putting items under ASSE, the more likely you’ll have items for your intense wants. Check your budget and financial goals regularly so they evolve with you.

If you want a free budget tool as well as free financial literacy education that goes into the above topics in more detail, please checkout our free mobile app. It’s available on both iOS and Android. Thanks!


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