Understanding the Difference Between Needs and Wants

Many people struggle with a clear sense of what money provides and the role it plays in a happy life. This lack of clarity can be due to a variety of reasons, including childhood messages about money that were either positive or negative, and the experiences and emotions that have been associated with those experiences, such as witnessing money dysfunction or arguments between parents with disparate money views.

Moreover, the term “need” can mean different things to different people, and it can even have different meanings in different contexts. For example, the word need is often used in reference to human needs, but it can also refer to business or organization needs.

To understand the difference between needs and wants, it’s important to realize that a need is an absolute requirement for survival or well-being, while a want is something that is nice to have but not necessary for survival or well-being. For example, water is a need because it’s essential for life and without it, you would die.

A need can also be viewed as the amount of money someone is required to have for daily living expenses and to pay off debt. This is a key concept in understanding financial independence because if you have enough to meet your basic needs, you can focus on building wealth through investing and saving.

While it’s common for people to have conflicting feelings about money, it’s possible to gain clarity about what matters most by using a framework called “needs-based budgeting” that helps you differentiate between your true needs and wants. It begins with identifying what you need in each area of your life, such as housing, food, transportation, utilities and clothing.

Then, you can create a budget based on those items that is a reflection of your values. This will help you determine the most appropriate spending priorities and develop a financial plan that will meet your needs over time.

Psychologist Abraham Maslow developed a theory of needs that suggests that humans have a hierarchy of psychological needs, starting with basic physiological or lower-order needs (e.g., food, water and safety), moving through a middle level of psychological needs (e.g., belonging, esteem and self-actualization) and eventually leading to higher order needs, such as spiritual fulfillment and peace.

Another approach to understanding needs is offered by psychologist Richard Sennett, who proposes that an individual’s needs are the costs of being a human in society. His model focuses on the importance of respect for oneself and others as an essential element in fulfilling needs.

The use of the word need in English is governed by the rules of articles. The articles a, an and the indicate that a noun is specific or general, and are required before certain words to avoid confusion. Taking the time to learn how to use these articles correctly can help you communicate with clarity and confidence in your writing and speaking skills.