Needs
Wants
Wants summary:
Wants are those extra expenses that aren't necessary but that make life better.
Needs are the basics of everyday life, like rent and groceries. Wants are the upgrades, like a bigger house and dining out.
You can add wants to your budget after all of your needs are met.
Wants Definition and Meaning
In personal finance, wants are things you desire but don't need for survival. Think of wants as the nice-to-haves instead of the must-haves.
We often compare wants with needs when building a budget.
Examples of Wants vs. Needs
We all have basic expenses that we need to pay for day-to-day survival. And we all have wants that simply make life better. The needs always have to come first in your budget.
The line between needs and wants isn't always clear, however. Food is definitely a need, but that need can be met with basics from the grocery store. This means dining out or getting takeout is a want, not a need.
Here are some more examples of needs vs. wants:
Need | Want |
You need shelter. A small apartment or modest house would meet this need. | You want a large house or upscale apartment in a popular location. |
You need transportation. A modest used car or a bus pass would meet this need. | You want a new car with the luxury trim package. |
You need a way to make phone calls and check email. A basic smartphone would meet this need. | You want the latest iPhone or Samsung smartphone with unlimited data. |
You need a winter coat to stay warm and dry. A sturdy jacket from the thrift store would meet this need. | You want a designer jacket from the brand you saw on social media. |
You need some form of entertainment for your mental health. A library card would meet this need. | You want multiple streaming services so you can keep up with the latest content. |
If you're not sure if something is a need or a want, ask yourself: "What survival need is this meeting?" If you can't think of one, then it's a want. The expense may also be a want if you're already (or could be) meeting the same need with something less expensive.
How to Get Your Wants
Having wants isn't bad. We all have things that we want just because they make life more enjoyable. However, needs should always be prioritized over wants in the budget.
Once you've met all of your needs (including savings and debt repayment), you can start to budget for the wants on your list. Build those wants into your budget instead of making impulse purchases, as this will help you stay on track and avoid overspending. And remember that none of us can afford or have everything we want. But we can prioritize wants, so the money we do have goes toward the things that are most important to us.
How you budget for your wants is up to you. One method would be to budget a specific amount of "fun money" every month just for little splurges. Larger wants, such as a home upgrade, make excellent goals you can save for over time.
Wants FAQs
Spend less than you earn.
The three Rs of budgeting align with the three Rs for environmental responsibility:
Reduce. Cut down your expenses, especially the non-essentials.
Reuse. Reuse what you have to avoid spending on new things.
Recycle. Get creative and recycle items to cut costs.
First, stop spending more than you earn and increase your balances.
Second, look for ways to pay down your balances faster:
Consolidate debts to a lower interest rate.
Request an interest rate reduction and put more into reducing your balance.
Take on more hours at work or a side gig to earn more.
Sell unused things and use them to reduce your balances.
Take a look at your budget and focus on ways to spend less, like canceling services you don’t need and finding cheaper options for those you do.
Choose one or more “wants” to give up until your debt is paid off or your DTI reaches a target. Put the savings toward your debt.
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