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Spend wisely

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When you have competing demands for your money, it can be hard to make good decisions about what to buy and how to spend.

You may find it helps to put your expenses into Needs, Wants and Savings or Reducing debts.

Needs

These are the unavoidable costs that help to keep you and your loved ones safe, warm and fed. They include your mortgage or rent, food shopping, utilities, transport, as well as minimum payments on loans and borrowing. Remember to include any tax you owe, unless it has already been deducted from your salary by your employer.

Wants

These are all the things you spend money on that are not absolutely essential. They include meals out, going to the cinema, new clothes, gym membership, holidays and concert tickets.

Savings or reducing debts

Savings might be for emergencies, short-term goals (like a holiday) or longer-term plans (such as retirement). Debts include any debt repayments you make each month, in addition to any minimum payment requirement.

When you make decisions that involve spending, it's a good idea to keep these 3 categories in mind. If you notice that you are spending too much in any single category, it could be an indicator that you need to adjust your spending habits.

According to an OECD report into adult financial literacy competencies in G20 countries, more than half of respondents (54%) in China reported that they do not tend to live for today, preferring instead to spend wisely and save money where possible. 

Take the next step

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Mother and son blowing bubbles in the park; image used for build emergency savings
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Girl looking at cell phone at the station; image used for manage existing debt
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