Where does the money go?

“To stay financially healthy, you should spend less than you earn.” This rule of thumb may work for many people, but it isn’t beneficial if you can’t afford to pay your bills and living expenses. Balancing personal priorities and cultural expectations can sometimes be challenging for others. And suppose your work is seasonal or irregular. In that case, you can cover everything when you’re working but struggle to cover expenses in the months or weeks when you’re not. 

No matter your situation, it can be helpful – empowering, even – to separate your needs, obligations, and wants. This can help you set priorities and understand more clearly where you can make changes if you decide your spending isn’t matching your priorities.

Needs are the things you must have to live.

These include shelter and utilities, food, medication, clothing, and transportation. Even with needs, you often have to decide among a wide range of options that can meet those needs. Deciding what you can afford, maintain, and want to pay for can be challenging. 

Obligations include debts you owe and payments you’ve been ordered to make.

This category of expenses includes such things as child support, spousal support, and other judgments. 

Wants are the things you can survive without.

For example, while a reliable car to get to work is a need, a new vehicle with expensive features is both a need and a want.

But it’s not always so clear-cut. One person may view something as a want, while another may see it as a need. 

Separating needs, obligations, and wants empowers you to set priorities. 

Setting Spending Priorities

Many people who track their spending for a week or a month discover that they are spending money in small ways that add up and sometimes don’t match their priorities. Once they track their spending, they can better decide which bills and expenses can be reduced. 

Suppose you don’t understand exactly what you owe, to whom you owe it, and how much it costs you to live. In that case, you can forget about any financial composure in your present situation.

To get a clearer picture of how you’re using your money and resources now, see the next part of this series, Your Money, Your Goals Part 2- Behind on bills?


Larry Marvin

LifeCrafter Money $ense


Consumer Financial Protection Bureau, Consumerfinance.gov/consumer-tools/educator-tools/your-money-your-goals

Stay On Top Of Your Spending With A Little Organization – Breathing Room. https://breathingroom.umd.edu/2019/03/21/stay-on-top-of-your-spending-with-a-little-organization/