Smart Budgeting: Needs vs Wants
Luna's intuitive approach to budgeting focuses on behavioral change, not restriction. Plus, our adaptive budget system fits any income pattern.
Why Traditional Budgets Fail
Most budgeting apps make you track every dollar into dozens of categories: groceries, gas, utilities, subscriptions, entertainment, dining, coffee... The result? Analysis paralysis and guilt when you inevitably "overspend" in one category.
Luna takes a different approach inspired by behavioral finance. Instead of micromanaging categories, we focus on the fundamental question: Is this spending essential to your life, or is it discretionary?
Needs vs Wants
Luna simplifies budgeting into two fundamental categories:
Needs
Essential expenses you can't avoid: housing, utilities, groceries, insurance, minimum debt payments, transportation to work. These are your non-negotiables—the bills that must be paid.
Wants
Discretionary spending that improves your quality of life: dining out, entertainment, hobbies, subscriptions, shopping, travel. This is your fun money—spending that enhances your life but isn't strictly necessary.
Custom Categories Within Each Group
While Luna simplifies the high-level view, you can create custom categories within Needs and Wants for more granular tracking:
Needs Categories
Wants Categories
Business Mode: Fixed vs Variable
For business users and self-employed individuals, Luna adapts the same philosophy with business-oriented terminology:
Fixed Expenses
Predictable monthly costs that don't change: rent, insurance, software subscriptions, loan payments. These are your operational baseline.
Variable Expenses
Costs that fluctuate based on business activity: marketing spend, supplies, contractor payments, travel. These scale with your operations.
Adaptive Budget for Variable Income
Traditional budgets assume a fixed monthly income—but what if you're a freelancer, work on commission, or have irregular pay? Luna's adaptive budget system lets you set categories as percentages of your income instead of fixed dollar amounts.
Here's how it works:
Amount Mode ($)
Set a fixed dollar amount for the category. Best for expenses that don't change, like rent or subscriptions.
Percentage Mode (%)
Set a percentage of your monthly income. The dollar amount automatically recalculates as your income changes throughout the month.
Hybrid Flexibility
Mix and match modes across categories. Keep housing as a fixed amount while setting dining out as 5% of income—the best of both worlds.
This creates a fully hybrid adaptive budget that fits your lifestyle—whether you're salaried, self-employed, or somewhere in between.
Smart Categorization That Learns
Luna uses machine learning to automatically categorize your transactions as Needs or Wants—but not in the way traditional apps do. Instead of relying on generic merchant databases that often get it wrong, Luna learns from your patterns.
When you recategorize a transaction, Luna remembers. Over time, this personalized learning increases categorization accuracy to over 95%—far beyond what traditional apps achieve. Your DoorDash order might be a Want for most people, but if you consistently mark it as a Need, Luna adapts to your lifestyle.
The Behavioral Insight
The power of Needs vs Wants isn't in rigid enforcement—it's in awareness. When you see that a large portion of your spending goes to Wants, you gain insight. You're not "bad with money"—you're making choices that might not align with your goals.
This awareness, delivered without judgment, is what drives sustainable behavioral change. You start asking yourself before purchases: "Is this a Need or a Want?" That simple question shifts your relationship with spending.
The Gray Areas: Some expenses blur the line. Is a gym membership a Need (health) or a Want (could exercise for free)? Is a nicer apartment a Need (safety) or a Want (luxury)? There's no right answer—categorize based on your values and priorities.