Apr 30, 2022
Human life is full of desires. Each coming day brings new aspirations to our life, and we try to fulfill these aspirations throughout our life. Our aspirations can be broadly classified into two terms: Wants and Needs.
At first sight, the difference between wants and needs might seem obvious; “Needs” are things you need to have for survival, and “Wants” are things you want to have but are not essential for survival. But it is more complicated than that because what is a need versus a want varies from person to person. To spend and save money wisely, you must know the difference between wants and needs.
Needs are those requirements that are extremely necessary for a human being to live a healthy life. They are cultural, personal, psychological, and social that are necessary for a person’s survival.
In the past, the three basic needs of human beings were food, clothing, and shelter, but with the passage of time, healthcare and education also became essential, improving the quality of life. They have become our priority as they are things that keep us healthy and safe. Therefore, if needs are not fulfilled in time, it may result in illness and inability to function properly.
In finance, wants are defined as something that a person would like to possess either instantaneously or later. Wants vary from person to person and time to time. In addition, they are optional, and a person is going to survive if not fulfilled.
We all know that human wants are unlimited, but the means to satisfy these wants are limited. Thus, an individual’s wants cannot be met, and they must seek alternatives. Moreover, an unfulfillment of wants may result in disappointment.
While filling out your budgeting worksheet, you categorize your spending as either wants or needs. This helps separate your expenses into what is necessary for your well-being and survival (needs) compared to what you would like to have but do not require (wants).
These could be Food, medication, utility bills, rent, commuting, work uniform, and healthcare therapy.
While Wants are the things you choose to buy, you could live without them, such as travel, home purchases, dining out, entertainment, new clothing, monthly subscriptions, and electronics. Wants are not characteristically bad, and they are pleasant and often can assist you in accomplishing essential goals like staying healthy, having fun, and keeping in touch with loved ones. But they are not necessary for your survival or well-being.
The following points are essential so far as the difference between wants and needs is concerned.
Subsequently, the category of expense is a need, but the specific option you choose within that category is a want. For instance, having a phone is a need so that you can communicate with family or coworkers or order your medication. All these things can be accomplished by a simple phone. But if you choose to spend hundreds of dollars on a new smartphone, that extra spending is suddenly a want.
Choosing the option that is a want rather than a need is not always dire. For instance, purchasing organic food may be an ethical choice that is worth the money but it is an option. Considering which expenses are and are not optional will help you create your household budget more effectively.
With the above discussion, it is concluded that needs and wants are separate forces that compel actions for fulfillment. If a person’s needs are not met on time, then that person’s survival is at stake, whereas wants are something that a person is craving for, but its fulfillment is not necessary for the survival of the person.
So needs can be distinguished from wants based on their significance. Hence the difference is between what is required and what is desired.