Identifying wants and needs

Infographic by Paula Pant and About.com

Earlier in the week, we discussed the importance of deciding which of your expenses are needs and which are wants. Today’s infographic from Paula Pant and About.com can help you make those decisions.

Remember: there’s nothing wrong with spending money on things you want. However, to reach your financial goals and maintain your financial health, there may be times when you will have to sacrifice the things you want.

CTC tips: needs vs. wants

Hand-cell phone

It’s important for your financial health to identify which of your expenses are needs and which are wants. It can be easy to think of everything we want as things we need: we need an internet connection; we need a car. In certain cases, this may be true. Usually though, we probably only need these things to maintain our current lifestyle. However, that doesn’t make the things we want things we need.

Take a look at your expenses and separate them into two lists: needs and wants. Be as honest as possible. For example, it might be hard to imagine not having a broadband connection at home but do you actually need it?

Once you have your list of wants, rank them in the order of importance. Consider how difficult it would be to give these things up or live without them. Don’t worry: just because it’s a “want” doesn’t necessarily mean you have to cut it out of your life. However, it does mean you should be open to that possibility should the need occur.

When money gets tight, you’ll need to cut expenses. You can’t deny yourself the things you need; you have to dump the things on your want list. By prioritizing the items on your want list ahead of time, deciding which expenses to drop should be easier.

Kiplinger’s personal finance quiz

man w laptop

It might be hard to think about quizzes during Spring Break but I encourage you to to take Kiplinger’s personal finance quiz. It has great questions on retirement planning, taxes, credit, saving, and investing.

Online quizzes like these may seem trivial and that’s mostly true. Acing them doesn’t necessarily mean you’re a personal finance guru any more than failing means you’re financially inept. However, taking a personal finance quiz can help you identify your financial strengths and weaknesses. You may find that there are aspects of personal finance that you haven’t even addressed!

If you decide to take the quiz, let us know how you did!

Questions for new investors

Investing

If the world of investing is completely new to you, you might not know where to start. There are thousands of websites and books out there that are designed for beginners – but even sources like those can be intimidating or hard to grasp. So instead of learning about the world of investing from other people’s points of view, why not begin by thinking about investing from your perspective?

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