Personal Finance / Unit 2: Budgeting
2.1 Needs vs. Wants
Notes
A need is something required for health, safety or earning a living. A want is something that improves life but is not required.
- Needs: basic food, housing, utilities, transportation to work or school, basic clothing, necessary health care.
- Wants: streaming services, restaurant meals, the newest phone, designer shoes.
- Some items are partly both: groceries are a need, but name-brand snacks are a want.
- Choices are personal, but needs come first when money is limited.
- Example: a coat for winter is a need; a $200 fashion jacket when you own a good coat is a want.
Practice
Which of these is most clearly a need?
Food is required for health; the others are wants.
Tom has a working phone but buys the newest model for $900. This purchase is mostly a:
The need (a working phone) is already met, so the upgrade is a want.
Money is tight this month. What should come first?
Covering needs comes before wants.
Ready for more? Take the Unit 2 test.