When creating a budget, many people jump right in and start with items like rent, food, cars, and entertainment.
But we would encourage you to take a step back before drilling down into specifics. Start with a simple two-column sheet and list your “needs” and “wants.”
“Unfortunately, most of us have a hard time distinguishing between our NEEDS and WANTS,” writes Mick Owens, author of the popular book Diamond of Life: The Five P’s of Success and Significance. “That is often when our wants seem like needs, and we end up in bondage to a bunch of stuff!”
Needs vs. Wants
Needs are exactly what you would imagine: items that are considered a necessity by most. Food, water, clothing, and shelter. Some would also consider transportation a need.
Wants are items that can help you live more comfortably. Wants vary from person to person, but in general, travel and entertainment are considered wants. A gym membership and your daily Iced Caramel Macchiato also fall in the wants category.
“Put on the full armor of God, so that you can take your stand against the devil’s schemes. For our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms. Therefore put on the full armor of God, so that when the day of evil comes, you may be able to stand your ground, and after you have done everything, to stand.” Ephesians 6:11-14
50/30/20 Rule1
Some will suggest the 50/30/20 rule as a rough guideline when it comes to separating needs and wants. The rule suggests using 50% of your income on needs, 30% on wants, and 20% on savings and debt. While the 50/30/20 rule can be a good start, it often raises more questions than answers.
“When it comes to this whole material part of your diamond, prayerfully figure out how much is enough,” said Mick. “If you are blessed to the point that you can afford the nicer things of life, then that’s okay–just hold it all with loose hands. God may call you to give it all away to others who have needs greater than yours.”
- Forbes.com, January 31, 2025
