wants vs needs examples

One of the most challenging aspects of creating a monthly budget is determining which expenses are necessary and which you can survive without. Whether you are reevaluating your budget or creating one for the very first time, it is understandable to feel overwhelmed by the task of breaking down your spending into categories. 

Although the goal for budgeting varies, the main objective remains the same. Whether you aim to save money or pay off debt, the objective is to minimize your spending on unnecessary expenses. By working to create room in your budget by cutting down on luxuries, you’ll be able to reallocate that money towards your goal. 

Spending money on wants is not inherently a bad thing. It’s good to have fun and treat yourself to the luxuries you desire. However, moderation is critical, especially if you are trying to save money or improve a difficult financial situation

It is essential to know the difference between wants and needs to create the financial future you desire for yourself. 

Spending Money on Unnecessary Expenses

So, how can you tell when you are spending too much money on wants rather than needs? How do you identify when your spending has gotten out of control? 

If you are being unwise with the use of your income, you are likely going to see a few patterns form in your finances. A few patterns you might notice: 

  • You might be reaching the bottom of your checking account each month. 
  • You might be dipping into your savings account regularly to cover bills you have due. 
  • You might have racked up balances on your credit cards that you can’t afford to pay down at the end of the month. 

These are signs that you could be spending too much money on things you don’t need to the point where it could become detrimental to your finances. 

Understanding the Difference Between Wants and Needs

Once you’ve realized you need to spend less, the tricky part can be figuring out how to tell the difference between wants and needs. It can be easy to get wants and needs confused in this current day and age. 

Our modern society and the marketing techniques used by big corporations often convince us that wants are actually needs. This messaging has been so ingrained in us that we feel compelled to buy new cell phones the minute they release the latest model, even when we already have a perfectly functioning older model. Not all of us have the resources to live this kind of life.

Some examples of needs and wants can help us tell the difference between them so we can take better control of our finances.

Eight Examples of Needs and Wants

Knowing whether an expense is a need or a want can be confusing even for the most adept. An example or two can help most people better understand the difference between needs and wants. 

Here are eight examples to help you identify how to tell them apart:

Wants-based Expenses

The wants in our budget don’t always look like a luxury item or a new car. They can look like habits we’ve grown accustomed to or purchases we’ve come to think of as necessary for comfortable living. 

Just because an expense is a want does not mean it will be easy to sacrifice. But the difference between wants and needs is not whether they are difficult or easy to eliminate but rather whether they are necessary to your survival.

Here are some examples of wants that can be cut or significantly reduced in your budget: 

2: Dining Out and Delivery

While food is one of the basic needs for survival, going out to eat or ordering take-out for delivery is not. Eating food is one of the most basic physical needs, but this does not apply to having other people prepare it for you. We all deserve a bit of a treat sometimes but dining out is not a necessity.

Instead of eating out at a restaurant or from a drive-through during your workday, brown bag your lunch as often as possible. You’d be surprised at how much money you’ll save from a brown bag lunch several times a week. 

Additionally, with the pandemic forcing us to quarantine for a time, we have all gotten quite used to ordering delivery to our door. Many of us have become addicted to the convenience of food dropped off at our front door. But the delivery fees and tips are not conducive to saving money. Take a break from delivery to see if you can get used to life without it again. 

2: Monthly Subscriptions and Memberships

No matter how much they might feel like an integral part of our lives in this modern age, subscriptions to media streaming services are a want and not a need. 

When we picture living without Netflix or Spotify, needs and wants can get muddled. But these services are not essential. 

Despite how difficult it might be, you can live without them, and even canceling them temporarily could save a whole lot of money each month. 

3: Daily Coffeeshop Runs

Who isn’t addicted to their morning Starbucks run these days? This hurts us to say, but that Venti vanilla latte with an extra shot of espresso is not an essential cost in your life. We know it might feel like a need, but there are other options to get your caffeine fix that are far easier to afford. 

Now we aren’t going to say anything crazy like you will suddenly be able to afford to purchase a house if you just stop buying Starbucks and avocado toast. But drinking your coffee before leaving the house or using the coffee machine at your job can help you save little extra money each month.

4: New Clothing

There are times when new clothing is a necessity, but often it is more of a desire than a need. If items of clothing are falling apart and you need a replacement, that could be considered a need. However, adding to your wardrobe with clothing that is not replacing any item that can’t be worn anymore is an example of a want. 

Expensive clothing like designer items will always be considered a desire that is unnecessary to your life. Shopping can be enjoyable, but if your resources are limited right now, you will want to save that money for more crucial expenses. 

Needs-based Expenses

Needs can be defined in the most elementary way as necessities that all other humans in the world require to survive, like food and shelter, and good health. You must be able to afford these costs necessary for you to live your life, so they must take precedence over the more frivolous aspects of life. 

The needs in your expenses aren’t always determined by the general category but also by how you spend in that category. The money you spend on your physiological needs is vital to your financial plan and should never be sacrificed for non-essentials. 

These basic needs are usually the part of your finances that you won’t want to change much when cutting expenses. However, there may be minor ways to adjust them if need be.

5: Rent or Your Mortgage Payment

The ultimate example of a need is basic shelter. Everyone needs shelter over their heads and a safe place to sleep at night. Your rent or mortgage payment is a non-negotiable cost. 

Even when life gets complicated and you are experiencing a strain on your finances, the money you pay for housing will always remain a priority.

Of course, there may be circumstances in which you might decide to downsize. If your housing costs have become unaffordable, it might be time to talk with the person you share your home with about the possibility of trying to sell it and moving somewhere more affordable. 

6: Health Insurance, Medical Care, and Medication

Proper healthcare is a necessary cost in life which means there must be room in your budget for insurance costs, medical assistance, and the medication you need. You must be financially prepared for an emergency as you can’t always predict what life throws at you. 

Mental and physical health should not be divided between needs and wants. Your mental well-being is just as important as your physical wellness, so caring for mental illness should be considered a need in your finances.

7: Food

Everybody knows you have to eat to survive. But, just as we mentioned above, food as a need does not apply to all forms of sustenance. 

There is a difference between the necessary costs of grocery shopping to feed yourself and your family and constantly eating out. Groceries are a need in life; anything beyond that is likely a want.

It is possible to reduce the amount you spend on groceries to increase your savings without sacrificing your needs. There are grocery stores with more affordable prices and meal plans you can find online to cut costs.

8: Transportation

Every person needs some type of transportation to get to and from places, most notably your place of employment. Transportation costs can come in the form of a car loan with monthly payments or a public transportation pass. 

The difference between transportation needs and wants is only using what you currently happen to have and the bare minimum of what you need to get around. Buying a new expensive car when you already have one is unnecessary. 

Is Paying Off Debt a Need?

At first glance, you might be unsure whether debt repayment is a need or a want since it doesn’t seem to fit very well in either category. Even though making your credit card payments is not something you need to survive per se, it is definitely something that ought to be considered as essential.

Most financial experts’ esteem needs to include debt repayment. You need to be able to pay the bills on your credit cards and loans with monthly installments because if you miss a couple of payments, your debt could be sent into collections. 

Putting off paying your debt when money is tight is counterproductive as the interest charges will keep stacking up, and defaulting on a loan or credit card could severely harm your credit. 

Is Saving Money a Need? 

Like debt repayment, you might struggle understanding what category saving money falls into when it comes to needs and wants. Saving money for long-term financial goals still ought to be in your mind when attempting to cut costs. 

This might feel like a want since it doesn’t seem like an immediate necessity, but your savings should be considered a need, just like paying off the money you owe. We advise you to prioritize an emergency fund and retirement savings in your budget at all times. 

Using the 50/30/20 Budget

If you are unsure of how to go about the business of dividing up your needs and wants, there is a popular simple plan recommended by financial experts called the 50/30/20 budget. It simplifies your spending so much that you don’t waste all your time obsessing over money. It will become second nature to you by sticking to it like other habits like exercising regularly. You don’t even think about it anymore. 

The 50/30/20 system breaks down your income so that 50% of your after-tax income is spent on your needs, 30% is spent on wants, and 20% is spent on saving and debt repayment. This can be an excellent strategy for you to employ when you feel at a loss for how to handle your money. 

The percentages of this division of wants and needs can be tweaked depending on your finances. But if you are willing to make a few changes in your life, you will see a noticeable improvement in just a couple of months. 


Do you know the difference between wants and needs?
Differences in Needs vs Wants (List With Examples!) – Barefoot Budgeting
Needs Vs. Wants: How to Tell the Difference – Abilene Teachers Federal Credit Union

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