Businesses exist to sell and make profits, but as a consumer, it is very important to avoid spending on wants and only focus on spending on needs. When you can distinguish between needs and wants, you will have knowledge to spend wisely. For example, paying rent is a need, while buying a new pair of shoes when you already own several is a want. When you prioritize essential expenses over wants, you will be able to avoid overspending.

But the real question is how do you actually differentiate needs and wants?

Groceries, gas, health-related things, etc. are needed, so I prioritize my money towards those things.

I’ve slowly learned over the years that things I want often collect dust, unless it’s like a smartphone or PC that I use on a daily basis.

I think a need is something essential, like food, bills and things you rely on every day. A want is something you’d enjoy having but could manage without. I try to ask myself, “Do I actually need this, or do I just fancy it?”