Understanding the difference between needs and wants is crucial for making sound financial decisions and maintaining a healthy budget.

What Are Needs?

Needs are essential items and services required for basic survival and functioning in society:

• Housing and utilities
• Basic food and water
• Healthcare
• Basic transportation
• Essential clothing

What Are Wants?

Wants are items and services that enhance life but aren't essential for survival:

• Entertainment subscriptions
• Luxury clothing and accessories
• Dining out
• Latest gadgets
• Vacations

How to Prioritize

Follow these steps to make better financial decisions:

1. List all your regular expenses
2. Categorize them as needs or wants
3. Ensure needs are covered first
4. Budget for wants from remaining funds
5. Save before spending on wants

The 50/30/20 Rule

A popular budgeting method:

• 50% for needs
• 30% for wants
• 20% for savings and debt repayment