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1.1.2 Prioritize your needs and wants

From Financial Consumer Agency of Canada

1.1.1 The difference between needs and wants

1.1.3 Test how you make spending decisions

Knowing the difference between needs and wants is the first step. The next step is setting priorities so you know where to spend your money.

One helpful way to set spending priorities is the 1-2-3 system:

1 = items that are essential for healthy living (e.g., basic food, shelter, clothing)
2 = items that are not essential but are important (e.g., a bicycle or transit pass, running shoes, cell phone)
3 = items that are not essential and not important (e.g., candy bars, spa treatments, music downloads)

My needs, wants and priorities

Decide if each item is a need or want, and rate it as a 1, 2 or 3 priority. You can add recent purchases you’ve made. Enter the estimated monthly cost. (For one-time purchases, divide the total cost by 12 to estimate an average monthly cost.) Then add up the cost of the category 2 and 3 items. Can you think of anything else you could do with that money?

Items	Need	Want	Priority	Estimated monthly cost
Bottled water	Bottled water is a "Need"	Bottled water is a "Want"	Bottled water Priority	Bottledwater Value $ Invalid format or value.
Rent	Rent is a "Need"	Rent is a "Want"	Rent Priority	Rent Value $ Invalid format or value.
Daycare	Daycare is a "Need"	Daycare is a "Want"	Daycare Priority	Daycare Value $ Invalid format or value.
Transit pass	Transit pass is a "Need"	Transit pass is a "Want"	Transit pass Priority	Transit pass Value $ Invalid format or value.
Smart phone with plan	Smart phone is a "Need"	Smart phone is a "Want"	Smart phone Priority	Smart phone Value $ Invalid format or value.
Daily newspaper	Desk is a "Need"	Desk is a "Want"	Desk Priority	Desk Value $ Invalid format or value.
Weekly lunch with best friend	Weekly lunch is a "Need"	Weekly lunch is a "Want"	Weekly lunch Priority	Weekly lunch Value $ Invalid format or value.
Winter coat	Hiking boots is a "Need"	Hiking boots is a "Want"	Hiking boots Priority	Hiking boots Value $ Invalid format or value.
Other#1 Other	Other is a "Need"	Other is a "Want"	Other Priority	Other Value $ Invalid format or value.
Total cost (priority 2 and 3 items)				$0.00

What else I could do with that money:

Download the interactive PDF and add it to your Financial Toolkit [PDF - 213KB]

Remember: There's no "right" or "wrong" when it comes to defining your needs and wants and setting your priorities. For example, even though that weekly lunch with your best friend may be a want rather than a need, it may be important to you, so it’s worth spending money on—if you can afford it. The important thing is to find a balance between needs and wants so you can enjoy your life today and prepare for your future.

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Date modified:: 2019-03-01