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Introduction
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Planning a budget
Step 2: Set your priorities
| Short-Term | Long-Term | |
| Needs (Necessities) |
Affordable rent Affordable groceries Emergency funds Essential clothing Basic utilities Basic mobile subscription Basic phone Childcare services (if you have dependents) |
Public education
Basic home Life insurance (if you have dependents) Basic car/motorcycle Basic medical insurance Basic household equipment Retirement savings |
| Wants (Extras) | Netflix
Newest smartphone Starbucks coffee Family holiday Cigarettes Expensive watch Expensive clothes Restaurant food Air-conditioning |
Vacation Premium car/motorcycle Luxury home Expensive furniture Private education Private medical treatment High-end medical insurance |
Decide on a few priorities for your budget next month. Use the diagram above to help you figure out your priorities in the short– and long–term.
Budget quadrants
- Needs (Necessities)
Your needs are the important items that will get you through your daily life. These are the things you need in order to live such as food, shelter, transportation, etc.
- Wants (Extras)
Wants are things you desire for pleasure or convenience, while needs are essential for survival. Eating home-cooked food is a need, while eating out is a want. Driving a car can be a need, but often it is a want due to personal preference.
- Short-Term
Consider items you will need to spend money on in the next few weeks or months.
- Long-Term
Long-term items are items you purchase that you will use over the next few decades.
By thinking about what you need in the short– and long-term, you’ll have a better idea of how much you will need to save for the future.
We’ve included some examples in each section to help you get started, but feel free to make any changes to suit your own situation.
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