Unlike needs, wants are things you can get by without, even though you’d like to have them.

The latest boots, a newer computer, and dinner at a special restaurant are all examples of things you might want, but probably don’t really need. If you decide that a want really is a need, such as an unlimited data plan for your phone, then you’ll have to sacrifice something else to pay for it.

Keep in mind that one person’s want may be another’s need, and the other way around. If you live in a city with decent public transportation, you probably don’t need a car, even if you’d love to have one. Outside a major city, however, you might need a car just to get to work. Even then, carpooling probably would be an option. Your need vs. want decision becomes one of driving with a friend, co-worker, or acquaintance compared to driving by yourself.

Once you decide where to draw the lines on a whole series of needs vs. wants, your budget decisions will be much clearer.

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