I don’t know about you, but sometimes when I look at my bank statement, I feel a little guilty. I’ve definitely been there. We all want to enjoy life and treat ourselves, but sometimes money slips away on things we don’t really need. When I really took a close look at my spending, I noticed a lot of my “treats” were eating up a big part of my income. I even felt a bit bad buying skincare I barely use.
That moment taught me something important. Knowing the difference between what you need and what you want isn’t about being strict or cutting yourself off. It’s about feeling more in control of your money and having peace of mind with how you spend it.
What Is the Difference Between Needs and Wants?
Needs are the basic things you must pay for to live and function each day. They come before your wants because they are essential for your well-being. These include the items and services that keep you safe and healthy.
Some examples of needs include:
- Rent or housing
- Groceries and basic food
- Utilities such as electricity, water, and internet (especially if you work from home)
- Transportation to work or school
- Healthcare and medicine
Meanwhile, wants are things that make life more comfortable or enjoyable but are not necessary for survival or things that you can live without. These could be:
- Eating out or ordering takeout because cooking feels like a full-time job.
- Buying new clothes or skincare even though your closet and shelf are already full.
- Paying for three streaming apps but only watching the same show on one.
- Traveling or going to concerts because “you only live once.”
- Getting new gadgets even though the old ones are still perfectly fine.
- Ordering milk tea again because “I deserve it.”
- Upgrading your phone just for the camera.
- Buying another tumbler you’ll never use.
- Adding random things to your cart at midnight.
- Booking a staycation for the gram.
Why Is It Important to Know Your Needs and Wants?
When you clearly figure out what you really need and what you just want, managing your budget gets a lot easier and you don’t feel as guilty about spending. I used to feel bad when I bought things I didn’t actually need, especially knowing I could have saved that money or paid bills instead. Knowing the difference between needs and wants helps you focus on what matters and reduces money stress.
The “Can I Function?” Test
So, how do you decide if something is a need or a want? I use a simple, powerful question that you can use, too:
Can I still function well without it?
If the answer is yes, then it’s a want.
If the answer is no, and not having it affects your safety, health, job, or daily life, then it’s a need.
How to Budget for Both Needs and Wants
You can still enjoy the things you want without overspending. The secret is to plan ahead and be honest about what you can really afford. I make sure most of my money goes to my needs first, then I leave a small amount for the things that make me happy.
Some people use the 50/30/20 rule, which means 50% of your income goes to needs, 30% to wants, and 20% to savings or debt payments.
But in real life, not everyone can follow that exactly, and that is completely fine. You can adjust it based on your situation. Some months you might save less, or you might have to skip a few wants, and that does not mean you are doing something wrong. It just means you are being realistic.
What matters is finding the right balance. You can prioritize your needs while still setting aside something small for joy. I still treat myself once in a while, maybe a coffee after a long day or a meal out on the weekend. These small things help me relax and remind me that money is not only for paying bills. When you manage your spending with both discipline and kindness to yourself, you can enjoy life without feeling guilty.
How Needs and Wants Changed Over Time
Needs and wants can change over time, and a want can sometimes become a new “need” for comfort or convenience, especially as your income changes.
For example, when I started working from home, the basic Wi-Fi plan was fine. But when my internet started to get “wonky” during important meetings, I decided to upgrade my internet speed. A reliable, faster connection became a new need for my work.
Final Thoughts
Knowing the difference between what you need and what you want isn’t about limiting your happiness. It’s about being smart with your money and living within your means. When you make thoughtful financial choices, you feel more in control and less stressed about money.
Take some time to list your needs and wants. Be honest with yourself and remember that it’s okay to treat yourself sometimes. The goal is not to take the joy out of life but to find a balance that helps you enjoy today while preparing for the future.