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Essential vs. Non-Essential Spending: How Do You Prioritize?

Money management might seem like a straightforward concept on the surface. After all, it’s just about balancing what comes in against what goes out, right? However, when you start to peel back the layers, you quickly realize there’s so much more to it. Effective money management requires foresight, discipline, and an understanding of your financial goals and priorities. It’s about knowing where every penny goes and ensuring that each decision aligns with your larger financial picture.

One of the most crucial challenges individuals face in this journey is distinguishing between essential and non-essential spending. It’s a fine line between needs and wants, and finding the balance can determine the state of your financial health. Let’s delve deeper and understand this critical differentiation.

person paying with card

Essential Spending: What Is It?

This refers to the unavoidable expenses that ensure your safety, health, and basic well-being.

  • Rent or mortgage payments: This ensures you have a roof over your head, offering protection from weather and providing a secure place to sleep.
  • Utility bills: Essential for services like water, electricity, and heat. Without them, basic activities like cooking, showering, or staying warm become impossible.
  • Groceries: Food and drink are basic human needs. Groceries cover everything you need to sustain yourself and keep your body functioning.
  • Health and medical expenses: This includes necessary medications, doctor visits, or emergency treatments. It’s about maintaining health and addressing medical needs.
  • Basic transportation costs: This allows you to commute to work, buy groceries, or attend essential appointments. So whether it’s fuel for your car, or a bus or train ticket, you need to move.

In a nutshell, if it’s a fundamental requirement for living a basic life, it’s essential.

Non-Essential Spending: The Extras

These are expenses that, while enhancing your lifestyle, aren’t strictly necessary for survival.

  • Eating out: Instead of cooking at home, you’re paying for convenience, ambiance, and a wider variety of food options.
  • Fancy coffee drinks: While a basic coffee can give you the caffeine fix, the fancy versions with syrups, creams, and toppings are more about luxury and taste.
  • Shopping sprees: While clothes are essential, going on a shopping spree usually means buying more than the basics or purchasing premium brands.
  • Movie nights: Entertainment is essential for mental well-being, but movie nights, especially in theaters, are a costlier option compared to other entertainment forms.
  • Vacations: A great way to relax and recharge, but not a basic necessity. So it’s more about experiencing new places or taking a break from daily life.

In summary, while these expenses add joy and variety to life, if you had to tighten your belt, they’d be the first you could cut out.

Read Next: What is Financial Literacy and Why is it Important?

So, How Do You Prioritize?

Making sense of your finances requires an organized approach. So here’s a closer look at each step:

  • List Your Expenses: It’s essential to know where your money goes. So jot down every little expense, from that snack you bought during your break to significant payments like your monthly rent or mortgage.
  • Categorize: Sorting your expenses is key. And by labeling each as ‘essential’ or ‘non-essential’, you get a clearer picture of what’s a must-have and what’s a luxury.
  • Review: Among the non-essential items, there could be some you can live without or cut back on. And perhaps you don’t need a subscription to five streaming services?
  • Set Limits: A budget is a plan. So decide how much you can spend in each category and make sure you don’t exceed it. This helps in preventing impulsive spending.
  • Revisit: Your expenses and income can change. So by reviewing your spending monthly, you ensure your budget adapts to your current situation.

Top Tips for Smart Spending

Being wise with your money doesn’t just mean cutting back. It also means spending in a way that gives you the most value. Here’s how:

  • Needs vs. Wants: It’s a classic question that makes you introspect. For instance, a pair of shoes might be a need, but that designer label might make it a want.
  • Wait Before You Buy: Impulse purchases can drain your wallet. So if you see a non-essential item you like, give yourself time to think. If after a few days you still feel it’s worth it, then reconsider buying it.
  • Find Alternatives: Enjoying life doesn’t always have to be expensive. If you love eating out, maybe hosting a potluck where everyone brings a dish can be just as fulfilling and more wallet-friendly.
  • Use Apps: In today’s digital age, let technology aid you. There are numerous apps out there that can help you manage your money, set saving goals, and track where every penny is spent. Using them can give you insights into your spending habits and offer suggestions for saving.


Prioritizing spending is essential. It helps you save, plan, and enjoy life without the stress of debt. Remember, it’s not about cutting all joys. It’s about balance. Making informed choices today sets you up for a brighter financial future. So, ask yourself each time: is it essential, or is it extra? The answer will guide your wallet.

If you’d like further help managing your finances, our team at Count can help you. Contact us here today! 

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