Needs vs. wants: How to know the difference

Co-author: Dhayana Sena

So you NEED a new kitchen/car/trainers/mascara/book/iPhone/TV/and so on, but do you really? 

Learning how to distinguish between needs and wants is an incredibly powerful financial tool. It can mean the difference between a financially comfortable future and one where you are stuck on the debt treadmill.

What are needs and wants?

The difference between needs and wants is basic economics.

A “need” is something you really can’t live without and require in order to survive. This includes things like basic food, clothing, accommodation, transportation and everything else that will help you with your daily life. 

A “want”, on the other hand, are those little luxuries that don’t quite make much of a difference in your day to day but you’d like to have for one reason or another. An example of this might be an iPhone 11, when you already have an iPhone 10 or an equivalent Android smartphone. Or it may be a new pair or killer high heels, even though you have an entire shoe rack full. 

How we fool ourselves

A good healthy breakfast is a need, a macaron with your morning coffee is a want. You don’t need to eat that macaron to survive (however delicious it is). 

Another example is, yes, you need somewhere to live, but that doesn’t mean a 280 square metre house when 180 square metres would suffice. The difference between the two is a want.

The trouble is that many of us say to ourselves “I need” whatever it is we want to buy. We don’t even question whether we really need it. We just tell ourselves we do and find all sorts of subliminal ways to reassign wants as needs.

There are some circumstances, though, where the line between needs and wants can be blurry, so it’s important that you take stock of what having these possessions mean from a practical perspective.


Sometimes, it’s fine to spend money on wants such as nice clothes. However, wants should come under a different category of your budget and only be bought when money has been put aside for them.

If you’re in need of some guidance on how to budget and make the most out of your savings, have a look at the wealth of information about budgeting here.

Getting a personal loan

There are times, despite your best efforts, where circumstances arise that will require you to spend a significant sum for what you need, such as buying a new washing machine or new tyres for your car. 

If you’re a bit tight financially in these situations, sometimes taking out a personal loan may be the best option. Not only will a personal loan give you the peace of mind of being able to afford what you really need (and in certain cases, want, as well), it will also allow you to pay back the loan over a certain period of time. For many people, this alleviates some of the financial burden that can arise from large sum transactions.

There are a variety of personal loans available in New Zealand, and many come with certain benefits, such as no break fees or competitive interest rates for borrowers with a good credit score. To learn more about personal loans available in New Zealand, take a look at Canstar’s database and compare what’s available using Canstar’s comparison tool.  

Compare personal loans with Canstar

We’re not perfect, but we can improve

The antidote is to stop in your tracks, think, and be honest with yourself when you tell yourself you need something.

Next time you think you need that new kitchen/car/trainers/mascara/book/iPhone/TV/and so on, ask yourself: “Is this really a need?”

Another strategy that works for some people is to keep a running total each month of how much you’ve spent on wants and how much on needs. Your total could be very enlightening.

Remember, the only victim of the crime of fooling yourself that a want is a need, is you (and your family if you’re financially connected).

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