The First Step to Budgeting: Determining Needs Vs. Wants

In the fall of 2010, I had a job change that was a significant pay cut. I was a single mom at the time, so the only one that could figure out how to pay the bills was me. I knew I had to start with making a budget. Even though I had managed multi-million-dollar budgets for years for work, I had no clue how to create one from scratch for myself.

The first thing I did was read Dave Ramsey’s book Total Money Makeover. He talks about setting a budget, but it was hard for me to grasp how. It was particularly challenging because I didn’t know where I was spending my money and I had a lot of debt. Not only did I have credit card debt, I had a $650 per month car payment and a second mortgage I had taken out for new flooring. I needed to figure out where my money was going.

I decided to take control. I wrote down EVERYTHING I spent money on for 30 days. Even if I got a soda at the vending machine at work, it went into my log.

At the end of the 30 days, I reviewed the journal and highlighted every “need” in green and every “want” in red. The red items were the things I would need to focus on in order to get out of debt.

For me, one of the big red items was eating out. I thought it was faster to just grab something than taking the time to cook. What I ended up learning about meal planning and prepping was that it saved me money and time. We ate healthier, and most importantly, the boys and I sat down and ate dinner together.

It is now eight years later, and my husband and I are debt free including our home. We still have to budget and make sacrifices to our needs vs. wants in order to stay on track with our goals. It keeps us from over-spending our income.

This is a huge reason that I became a Dave Ramsey Financial Coach to help people like me. We always start with setting goals and analyzing needs vs. wants of the current budget. You would be surprised how many things we think are needs when they are really wants. Asking ourselves that question can be hard.

Do you need help setting a budget? Getting out of debt? Or developing a plan to reach your financial goals? Please log on to to schedule a free 20-minute consultation. I would love to help you Do Life Better!

  • Black Facebook Icon
  • Black Instagram Icon