1.1.1 The difference between needs and wants

From: Financial Consumer Agency of Canada

If you'd like to have more money to spend, the first step is to know the difference between your needs and your wants. Here are some basic definitions:

Definitions

  • Need: A necessity, something required, something essential for life
  • Want: A desire, something wished for, something non-essential

Using these definitions, "a roof over my head" is a need. So are clothing, food, tools for work and medications. "A vacation" is a want, and so are meals in restaurants, video games, gym memberships and designer shoes.

Of course, one person's want may be another person's need. For Sam, who lives near a bus route, a car may be a luxury, while for Samantha, who doesn't have access to public transit and can't cycle to work, a car may be a necessity.

As well, needs and wants may change over time. A full-sized washer and dryer may be a need while you are raising a family, but apartment-sized models may be what you need when your children are grown and you have downsized to a smaller home.
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