Needs, wants and a simple budget
Tell your money where to go with the three-jar plan or the 50/30/20 split.
Needs and wants
- Needs are things you must have: a home, food, basic clothes, getting to school or work.
- Wants are nice to have: a new game, eating out, the newest phone.
Wants aren't bad. The trick is knowing which is which, so wants don't eat your savings.
The three-jar plan (for kids)
Get three jars and label them Spend, Save and Give. Every time you get money, split it between the jars. Watching the Save jar fill up is the first money tree.
50/30/20 (for grown-ups)
A is a plan for your money before you spend it. One easy split:
- 50% for needs: rent, food, bills, getting around.
- 30% for wants: fun, hobbies, eating out.
- 20% for your future: savings, paying off debt, investing.
Track it for one month
Write down everything you buy for a month. Most people are surprised. Small things add up: $5 a day is about $1,800 a year.
Remember
- Needs first, wants second, future always.
- Kids: Spend, Save, Give jars. Grown-ups: 50/30/20.
- Tracking for one month shows where your money really goes.
Check yourself
1. Which one is a need?
2. In 50/30/20, what is the 20% for?
3. About how much is $5 a day over a year?
Next lesson: Risk and reward
Money Tree School is education, not financial advice. Examples use made-up or historical numbers to show how things work; they are not recommendations to buy or sell anything. Markets can lose money.