Step 2: Set your priorities
|Short Term||Long Term|
Basic mobile subscription
Life insurance (if you have dependents)
Basic medical insurance
Basic household equipment
The latest smartphone
Private medical treatment
High-end medical insurance
Decide on a few priorities for your budget next month. Use the diagram below to help you figure out your priorities in the short and long terms.
- Needs (Necessities)
Your needs are the important items that will get you through your daily life. These are the things you need in order to live such as food, a home, transportation, etc.
- Wants (Extras)
Wants are the things you desire to buy for your pleasure or convenience. For example, home-cooked food is a need but eating out at restaurants is a want, because you don’t have to eat out. You just like to. Driving a car can be a need if you have no other option, but often it is a want because you don’t like taking public transportation.
- Short Term
Consider items you will need to spend money on in the next few weeks or months.
- Long Term
Long-term items are items you purchase that you will use over the next few decades.
By thinking about what you need in the short run and long run, you’ll have a better idea of how much you need to save for the future.
We’ve included some examples in each section to help you get started, but feel free to make any changes to suit your own situation.