Budgeting Needs Vs Wants

Needs vs Wants: How to Overcome This Common Budgeting Struggle

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Are you struggling to figure out how to fit both your needs and your wants into your budget? 

Balancing your needs and wants in your budget is no easy task. 

We have bills to pay, savings goals, and fun things we want to do.

And we often find ourselves staring at our budget wondering how we can do it all. 

One reason it can be challenging to balance our needs and wants in our budget is that many times our wants disguise themselves as needs

When wants disguise themselves as needs, it can be difficult to prioritize your spending, and budgeting turns into a source of frustration. 

Budgeting does not need to be a source of frustration. 

And knowing the difference between your wants and your needs can help make budgeting for both a lot easier. 

In this post, I’ll show you how to identify your needs and your wants to help you create a budget that you can feel good about and that works for you. 

Let’s start by looking at the difference between a need and a want. 

What is the Difference Between a Budgeting Need and Want?

A need is an expense that is necessary for survival, while a want is optional, and only something we would like to have in our lives. 

I like to think of our needs as our bare-bones expenses. The things we need to cover our basic living requirements. They include:

  • Housing
  • Utilities
  • Food
  • Clothing
  • Physical and Mental Healthcare
  • Commuting Cost

On the other hand, our wants are something that we don’t necessarily need but would like in our lives.

Examples of wants include:

  • Gym memberships
  • Streaming services
  • Dining out
  • Entertainment expenses
  • Travel
  • Donations

The thing to remember is that it’s not a bad thing to spend on your wants. Our wants can make our lives easier and can bring us joy. 

But the interesting thing is that as time goes by, some of those wants start disguising themselves as needs. They are sneaky like that. 

And when they do this, it can make it hard for us to prioritize our expenses. This is because we no longer know what expenses are essential for us to survive. 

Our wants have infiltrated our budgets. It’s up to us to identify them and intentionally decide if they truly need to be there. 

Ways Our Wants Disguise Themselves as Needs

Let me reiterate that having wants in your budget is not a bad thing. 

The problem starts to arise when we don’t recognize them as wants and treat them like necessary expenses.

To help you identify your wants, here is how our wants disguise themselves as needs. 


The lifestyle we choose is often a want disguised as need.

For example, we enjoy the perks of living in a major city where housing costs are more than they would be if we choose to live somewhere else. 

This choice of living in an area with a higher cost of living is a want. 

Another example is having the internet at home.

Unless you need the internet to perform your job from home, having the internet for entertainment purposes is a want. 


Upgrades to things like our cell phones, cars, and our homes can be wants disguised as needs. 

We may need a cell phone to meet our basic need of being able to communicate with others. But when we upgrade our phones to the latest model with the best data plan, that portion of the cell phone bill is a want. 

The same goes for our cars. We may need a car to get to and from work, but the cost of the upgraded leather seats and navigation system is a want. 


Things that fall into the category of needs, such as groceries, can disguise themselves as wants due to the choices we make.

For example, if you are at the grocery store for the food you need to survive, and also buy treats such as that new Oreo flavor, that Oreo purchase is a want. 

You don’t need the Oreos to survive. 

These purchases often get lumped into our needs categories, making it look like we “need” to budget more in our food category than we do if we removed the wants. 

Other examples of this include:

  • Clothing purchases that go beyond what we need to be presentable in public and work
  • Taking a taxi when you have the option of taking the less expensive mass transit. 

Saving – A Need Often Mistaken for a Want

Our wants disguise themselves as needs, but we also have to be aware of the opposite—mistaking our needs for wants.

As we try to prioritize what we want to do with our hard-earned money, it’s easy for us to forget that saving for our future is a need and not a want. 

And saving for our future is a need worth prioritizing.

These savings goals include:

It may not be intuitive to think about these savings goals as needs since they aren’t immediate needs. But instead, they are future needs you must plan for. 

Saving for retirement is a need because we can’t expect to be able to work until we die. We need to be able to keep the roof over our heads when we can no longer earn an income. Having a stash of money set aside for retirement is a need for your future self. 

And saving for an emergency fund is a need because it will help future you keep food on the table during times of financial hardship. 

Why It’s Important to Distinguish Between Budget Needs vs. Wants

Understanding the differences between needs and wants will help you create a budget that covers all of your needs before you spend money on your wants. 

This distinction will help you make intentional decisions about where to spend your money because you won’t have any wants disguising themselves as needs.

You Know What to Cut Out When Times Get Rough

Knowing what part of your spending habits are wants will help you know where you can make cuts if you suddenly find yourself needing to reduce your expenses. 

Peace of Mind

Remember that your needs are the essential expenses for survival. And usually, the total cost of these needs is lower than the actual amount you spend each month. 

And knowing you could survive, if needed, on less than you typically spend each month provides peace of mind. 

Spend on Your Wants Guilt-Free 

When you have identified your needs, you can make sure you cover those in your budget first. 

And by covering your needs first, you are then able to spend on your wants guilt-free. This is because you know you have your needs, including your savings goals, covered. 

You’ll Feel Good About Your Budget

Balancing your needs and your wants in your budget will become easier when you know how to distinguish between the two.

As a result, your budget will start to feel liberating instead of frustrating.

This is because when you have awareness of what expenses are needs versus wants, you will be able to make intentional spending choices that you feel good about. 

How to Create a Budget that Balances Needs and Wants

Now that we know what the difference between a need and want is and why it’s important to make the distinction, let’s use that info to create a balanced budget that you can feel good about. 

Know Your Why

I always come back to this first step every time I talk about creating a budget or any type of money plan. 

To create a budget that works for you, the first thing you need to know is “what is your why?” Ask yourself what you are working towards and what your goals are.

Ask yourself why you want to budget. 

Are you trying to become debt-free? Do you want to save for a house or a grand vacation? Do you want to create more financial stability in your life? 

Take time to think about your why and envision what you want your life to look and feel like in the future. 

This will help you distinguish between your needs and wants and also keep you motivated to stick to your budget.

It will also help you weed out those wants that don’t align with your priorities and you’ll be using more of your money on the things that truly matter to you.

Determine Your Needs (Your Bare-bones Budget)

Before you spend money on your wants, you’ll want to make sure you have your needs covered. 

To do this, go through your expenses and identify each as need or want, being careful to uncover those pesky wants that have disguised themselves as needs. 

Also, make sure to identify your savings goals that are needs such as building an emergency fund or saving for retirement.

Related Post:  Bare-Bones Budget: Why You Need to Create Yours Today

Intentionally Spend on Your Wants

This is the part of budgeting that will feel liberating. 

When you know your why and your needs covered, you now get to decide what “extra” things do you want in your life? 

Do you want to patronize local restaurants? Go on a vacation? Donate to charities? Buy a campervan? Save for early-retirement? It’s up to you. 

And by keeping your why in mind, you will find is that you no longer spend on the wants that don’t align with your why. 

You’ll align your discretionary spending on the things that matter to you. 

And this is how you stop feeling frustrated with your budget and start feeling excited about what you can do with your money. 

You Got This

Balancing your needs and wants in your budget is no easy task. 

But by taking the time to correctly identify which expenses are needs versus wants, you will start to understand your expenses better. 

And better yet, when you combine that knowledge with an understanding of your priorities in life, you will start to feel confident in your budget and what it can help you accomplish.

Aligning your money with your needs and the wants that truly matter to you is a game-changer when it comes to personal finance.

It can feel overwhelming at first, but I know you got this.

Get to know your expenses. 

Get rid of the ones that are no longer serving you. 

And you’ll be on your way to creating a balanced budget that you will feel good about.

Resources to help you get started:

Tracking Expenses: A Surefire Way To Start Improving Your Finances

Bare-Bones Budget: Why You Need to Create Yours Today

How To Save Money From Your Monthly Salary – A 5-Step Money Plan

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Picture of Melody Creator of Cash for Tacos

Hi! I’m Melody and I want to help you create a vision for your life and provide you the necessary tools to use your money to make your vision a reality. 

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