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Deciding Between Wants And Needs

Deciding Between Wants And Needs

January 10, 2022

One of the hardest things to do, by far, is realizing when a want is not a need.

Budgeting is a balancing act. The secret to sustaining yourself from day to day while also working towards financial goals is building a budget that balances your needs with your wants. Pinpointing the difference between the two is a subjective proposition.

The “needs” that are really “wants”

In budgeting worksheets, some people object to separate categories for items in the “wants” category. Home internet, for example, is classified as a want and not as a need. But if you do not work from a home office (in which case your home internet is a business expense), there’s a good chance that home internet is a want (because let’s face it, you’re probably using it primarily to watch Netflix).

And the same is true for your cable television — your Netflix subscription and your iPhone as well. It also goes for your hair dye … These are all wants and not needs. You totally can do without these things, if you were forced to. They’re not necessary to live, as painful as it might be to lose them.

Cross-category needs and wants

Of course, wants and needs, sometimes, don’t fit into neat, distinctive categories. It’s too simplistic, for instance, to say that your grocery store spending is a need. Your entire grocery bill is a combination of wants and needs. Bread, milk, eggs, and whole fruits and vegetables can be classified as a need.

But, on the other hand, chips and cookies are most certainly not a need. Fruit juice is a want, especially if it is of that upscale variety. Milk is a need, but organic milk is a want. And so is the whole grain, organic honey-infused bread.

A lesson that can apply to your life

The 50/30/20 budget says that 50 percent of your after-tax income should be spent on “needs,” 30 percent should go to “wants,” and 20 percent should go to savings and debt reduction. That means there’s nothing wrong with buying fancy bread and milk or subscribing to Netflix. The 50-30-20 budgeting rule of thumb allows you to spend 30 percent of your take-home pay on things you want. The key is to separate your wants from your needs so that you’re more self-aware of how you’re spending money.


Distinguishing “wants” from “needs” will truly help you realize how much power and control you have over your own budget. If you’re choosing to spend money on wants, you easily can choose those items and re-direct your money elsewhere. After all, budgeting, at its very core, is not always about crunching numbers. Budgeting is the art of aligning your spending with your values.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was prepared by FMeX.

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