In the context of Expenses, “Needs” and “Wants” refer to different categories of expenditures based on their importance and necessity in our lives.
Here’s a breakdown of the difference between Needs and Wants:–
# Needs:– Needs are essential items or services that are required for our basic survival and well-being. These Expenses are considered fundamental and necessary for maintaining a reasonable quality of life.
Examples of needs include:-
1] Food and Water:- Purchasing groceries and paying for clean drinking water.
2] Shelter:- Rent or mortgage payments, utility bills, and Home maintenance costs.
3] Clothing:- Basic clothing items such as shirts, pants, and shoes.
4] Healthcare:- Medical expenses, health insurance premiums, and necessary prescriptions
5] Transportation:- Costs associated with commuting, public transportation, or owning a vehicle required for work or essential travel.
# Wants:- Wants are non-essential items or services that are not crucial for our survival but are desired for personal enjoyment, comfort, or luxury. These expenses are often discretionary and can vary greatly depending on personal preferences and lifestyle choices.
Examples of wants include::-
1] Entertainment:- Going to the Movies, concerts, or sporting events, subscribing to streaming services, or purchasing video games.
2] Dining Out:- Eating at Restaurants or ordering takeout.
3] Travel:- Vacations, weekend getaways, or leisure trips.
4] Luxury Goods:- Designer clothing, high-end electronics, or Expensive jewellery.
5] Hobbies and Recreation:- Sports equipment, gym memberships, or art supplies.
The distinction between Needs and Wants is subjective and can vary based on individual circumstances.
While Needs are considered essential and should be prioritized, Wants are discretionary and can be adjusted based on one’s Financial situation and priorities.
It is generally advisable to ensure that Needs are met before allocating resources to Wants, especially when dealing with limited Financial resources.