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Needs Vs. Wants: Understanding the Difference

Deep down we probably know the difference between a need and a want. But in a world of next-day shipping and unlimited upgrades, that line can get a little blurry. Who has time for blurry lines? No one.

So, let’s get a really clear picture of needs vs. wants—and the best way to get both covered in your budget. 


Key Takeaways

  • Needs are necessary for life.
  • Wants improve life.
  • If you have to cut spending, start with the wants.
  • When you budget, cover the needs before the wants. Always.

What Are Needs?

Needs are all the expenses that are necessary for you to get by in life. The most basic of these are what we call the Four Walls:

  • Food
  • Utilities
  • Shelter
  • Transportation

If you’re ever in an emergency situation (like a job loss) and need to get on a bare-bones budget—cover those Four Walls until you get back on your feet.

If you’re in a stable spot with your money, other essentials to cover include insurances, debt, and (for some people) childcare.

What Are Wants?

Wants are the expenses that improve the quality of your life. Essential? No. Delightful? Yes!

Here are some examples of wants:

  • Streaming services
  • Movie, concert or sports tickets
  • Sock subscription boxes
  • Upgrades
  • Entertainment
  • Designer brands
  • Bassoon lessons
  • Travel
  • Restaurants

You read all those right. They’re wonderful, but not vital! If you can afford to fit them in the budget, that’s fine. But don’t sacrifice your money goals or needs to pay for these things. They can wait. T. Swift will tour again, and if she doesn’t, she’ll probably invite you over for cookies anyway!

What Are Some Wants That Feel Like Needs?

Here’s where the line gets blurry, friends. And here’s where some truth gets served.


Yes, food is one of the Four Walls, but that means groceries. Because eating is a need—but eating out is a want.


Again, transportation is totally in the Four Walls—but that means getting yourself to and from work, the kids to and from school. You know, those kinds of trips. Travel is referring to those fun vacations. That’s a want.

Upgraded Phone Plans

Having a basic, cheap phone plan is pretty standard these days. You probably need it for work and safety purposes, but all the extra features and unlimited upgrades aren’t a need. Those are a want.


Kids ask lots of questions and get bigger. It’s just how they work. So you’ll probably need to buy new seasonal clothing most years. And if you start a new job and don’t have the wardrobe required, you’ll need a few things too. But buying designer brands or clothing for fun is a want.

And here’s the deal: We aren’t saying you can’t have wants in your monthly budget. It’s just about keeping your priorities straight.

So, how do you cover both wants and needs? Great question. Let’s answer it!

How Do I Budget for Wants and Needs?

As you set up your budget, follow these three steps:

  1. List your income.
  2. List your expenses.
  3. Subtract your income from your expenses (and this should be zero).

Then give yourself a pat on the back or toss some confetti in the air! Because you just created a zero-based budget! That means you’ve given every dollar a job—giving, saving, spending . . . covering those needs and wants.


Start budgeting with EveryDollar today!

And the way you cover both of those is by making sure you put in your needs before wants as you list your expenses! If you don’t have enough money to cover everything, cut some spending (starting with wants!) or increase your income (hello, side hustle).

Hopefully all those needs vs. wants examples and explanations have cleared up any confusion between the two. Now you can get your budget in priority order.

And if you need a budget, check out EveryDollar! This free budgeting tool does the math to show when you hit zero-budget status, and it makes creating—and keeping—your budget simple.

Simple budgeting. Clear priorities. You’ve got this!

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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