At work, at home, and in the country, there are talks about cutting costs to ensure sustainability. Prices are rising faster than income, and to keep up, some things have to go. How do we identify the things that can go?
In the book All Your Worth, the Warrens recommend that on a normal day, we allocate our incomes thus: 50% to needs; 30% to wants; 20% to savings. The idea is that there are some things that are needs. Even if you don’t have an income, you will still need to take care of them. There are some things that are wants. You are thinking of them simply because you have money, and there is nothing wrong with that. You also have to save.
By drawing the lines and defining what things are needs and what things are wants beforehand, if there is the need to cut costs you cut from wants. Wants are sometimes referred to as nice-to-haves.
“If you don’t think smart about money, you will end up thinking about money all the time.” Elizabeth & Armelia Warrens
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