What counts as a need
Needs keep you safe, housed, fed and able to work or go to school. Typical needs are housing, electricity and water, basic food, transportation to work or school, basic clothing, insurance and the minimum payments on any loans.
What counts as a want
Wants make life more fun but are optional: streaming services, concerts, eating out, new clothes you don’t need yet, the latest phone when your current one works.
When it depends on your situation
Some items are a need for one person and a want for another. A phone, a car or home internet can be a need if you use it for work or school. A fancier version of the same thing is usually a want.
- A basic phone plan you need for work: a need. The most expensive plan: probably a want.
- A car you must drive to a job with no bus route: a need. A newer, pricier car: a want.
A quick test
Ask: “What would happen if I skipped this for a month?” If you’d lose your housing, your ability to get to work or your health, it’s a need. If life would just be a little less fun, it’s a want.
Why small wants add up
Wants aren’t bad. Budgets work best when they include some fun. The point is to choose them on purpose instead of letting small purchases add up unnoticed.