When planning a budget, what is the recommended order for evaluating needs and wants?

• A. Consider wants first to ensure you get what you like.
• B. Ignore needs and spend as you like.
• C. Identify needs first, then decide if wants can wait or be reduced.
• D. Only save and never spend.

Answer: (C)

When planning a budget, start by sorting spending into needs and wants and put needs first. Needs are the basic things you must have to live and stay healthy and able to function—things like housing, food, utilities, transportation, and medical care. Once those essentials are covered, look at the wants—nonessential items or activities you’d like to have. Decide if any of those wants can wait until after needs are paid, or if you can reduce them to save money. This order helps make sure you don’t run out of money for important things and still allows room to save or treat yourself in a controlled way. If you started with wants, you might spend on extras before meeting essentials, which isn’t reliable. Skipping needs or never spending aren’t practical budgeting approaches either.