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Save more with smart spending

Article: Save more with smart spending

Save more with smart spending

Graphic showing Wants and Needs arrows pointing in different directions.We all know that budgeting is key to successfully managing your finances. And to do so, it’s important to distinguish your needs from your wants. Otherwise, you could end up overspending on luxuries that you can’t afford.
Want or need
Hey, we all enjoy spending on the occasional indulgence. But problems arise when it becomes a habit instead of an exception. Like spending on extras when we could be repaying debt or saving for that down payment.

Consider this
If removing a particular expenditure would directly impact how you live or work, that expense is likely a need. Think: housing, food, prescriptions, transportation, insurance, or utilities.On the other hand, think of wants as expenses that help you live more comfortably. You could eliminate these, yet still live and work as you currently do.

The gray area
Expenses can fall into both categories. A car may be essential if you commute to work. But the vehicle can become a want if you opt to upgrade to a luxury model. Same goes for other expenses. Sustenance is a need. Steak and lobster? Not so much.

Drawing a line
It can be hard to see wants as anything other than needs, especially if we’re used to having them in our daily lives. Remember, unless eliminating an expense hinders your ability to do your job or stay alive, consider budgeting for these items as non-essential.

Budget like a pro
A good rule of thumb is the 50/30/20 budget: 50 percent of post-tax monthly income goes to needs; 30 percent to wants; and 20 percent to savings and/or debt reduction.

Information is power
Visit the Advantis Financial Resources & Education Center for handy tools, simple tips, and friendly advice to help you budget smarter and reach your financial goals.