But, what exactly does the word essentials mean to you? An essential could be a lot of different things but it is something that is absolutely necessary.
So, what are the items that you can’t live without? We aren’t talking about that cute little knickknack you’ve been fawning over for your computer desk. We’re talking about things you literally can’t live without. Some might include food, toothpaste, shampoo, conditioner, toilet paper, diapers, laundry detergent, dish soap etc. Have you ever budgeted to see how much you spend per month on these daily essentials?
Here is a tip, track your expenses for an entire month. There are tons of free apps out there such as Mint, Fudget and Spendee that can be used as tools to help you learn more about what you spend your money on.
Once you figure out where you’re cash is going, set a goal, learn how to separate your expenses. What do you need and what do you want? Divide the categories into two buckets: wants and needs. Don’t forget expenses like insurance, mortgage payments, rent and anything else that might not be included in your monthly statements. We’d place insurance and a basic phone plan under needs, but a Netflix subscription and deluxe cable package will more than likely fall under wants.
Tip of the day: When creating your budget, never forget to pay yourself!
NerdWallet has a pretty awesome budget calculator that includes a suggested budgeting breakdown. If you distribute your monthly income in this fashion, you would spend 50% on needs, 30% on wants and 20% on savings and paying off debt. The only difference here is your 50% spend will have the power to pay off your debt while using Restore! This will allow you to allocate some more spending elsewhere.
Plug your monthly take-home income into this budget calculator to determine how much you have available for each category.
If your current spending is disproportionately based on the list you made, there’s good news: You can make adjustments and remember, you don’t have to totally cut out all of your wants but definitely stay aware of where you’re money is going and consider downsizing them if it looks like you’re overspending.
The reality is, skipping or not skipping the latte will not change your life. Neither will a splurge on the fluffier toilet paper or even spending a little extra on that wedding gift. But strings of decisions do matter. If you eat every meal out, buy only the finest home staples or make a habit of indulging your every gifting whim, the costs add up.