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How to balance what you need and want each month

Esther Shaw
Written by  Esther Shaw
5 min read
Updated: 21 Mar 2023

Not sure how to stretch your income to cover all your outgoings? We help you strike a balance

Every month, you'll have non-negotiable expenses, such as the mortgage or rent, council tax, energy bills, transport and food bills.

You'll also have ‘wants,’ such as new clothes, tickets to a band or a show, or meals out. These are all things you can live without, but having them makes life a whole lot more enjoyable.

It may seem hard to balance everything, but with some careful planning, you can fit both needs and wants into your budget – while still managing to , and for the future.

Prioritise your needs

While buying new shoes, gadgets or the latest video game may seem like a lot more fun than paying your utility bills, you must prioritise your essential outgoings – as these are vital for you to be able to live and work.

As well as recurring bills, such as your mortgage and utility bills, and regular outgoings, such as the grocery shop - don’t forget about annual costs, such as car, home and travel insurance, your MOT, and TV licence.

While these are likely to eat up a large chunk of your take-home pay, with some sensible budgeting, you should have some funds left over as ‘fun’ money, too.

Man with laptop and paperwork

Write a list

The best starting point is to sit down and write down all the things you spend money on.

That should include everything – from life insurance to haircuts.

Try and work out whether each one falls into the ‘needs’ or ‘wants’ category.

In some cases, the two can overlap. For example, you may need a car to get to work, but you don’t need a top-of-the-range sporty little number. Similarly, we need food to survive, but we don’t need to eat out at posh restaurants. It’s important to understand the difference.

Try the 50/30/20 rule

If you’re looking for a bit of help with your budgeting, you might want to try the 50/30/20 rule.

This popular method involves you splitting your earnings three ways, with 50% going on things you ‘need’ and 30% going on things you ‘want.’ This then leaves you with 20% to go into savings.

(This final 20% can cover a multitude of things, including paying down debt – such as credit cards and loans – slotting money into cash savings, making pension contributions, and also investing).

The 50/30/20 rule can be a really helpful guide if you're looking for a way to reliably cover essential costs, while still making sure there's money left each month for nice things you want to buy and do.

You can tweak the percentages a little, but these figures are a good rule of thumb.

To read more about different methods of budgeting, read: Five hacks to help you budget better

Budgeting tips

  • Be realistic. Setting unachievable goals could mean you end up worse than you were before

  • Be disciplined about sticking to your budget

  • Track your spending and your progress

  • Accept that your budget may need to be tweaked from time to time. Some expenses could go up, or you could get a pay rise or take on a side hustle, meaning you have more money coming in each month. Adjust your budget in line with this

Still struggling to make things balance?

If you’ve drawn up your budget, but are still finding it hard to find enough cash for everything, look if there are areas where you can trim costs.

See if you can shop around on some of your ‘needs.’ You might, for example, be able to make savings on your mobile or broadband bill. Do a bit of research, and you could cut a chunk off your car or home insurance at renewal time.

Also look at ways you can reduce your spend on ‘wants.’ Reduce the number of times you eat out in a month, or get fewer takeaways. Make use of discounts or vouchers when you go shopping, or shop at cheaper stores or outlet centres.

Splash out, guilt-free

The key with all of this is to find a system of budgeting that works for you – and that you can afford.

Once you can be confident that all your ‘needs’ are covered, you can then splash out, guilt-free, when you know you have enough left over to treat yourself.

‘Wants’ can mean different things to different people: for you, it might mean spending on designer clothing, owning a flash car, and going to the gym. For someone else, it might mean regular trips to the cinema or having drinks out with friends. ‘Wants’ can also include weekends away and holidays.

Just because you’re taking control of your finances doesn’t mean you have to restrict your fun.

You just need to have the right structures in place so you can do all this without worrying.