What is the difference between a "want" and a "need"?

The distinction between "want" and "need" is fundamental in personal finance. A need is something that is essential for survival and basic functionality, such as food, shelter, clothing, and healthcare. These are the resources that a person cannot live without and are necessary for maintaining a reasonable standard of living and overall well-being.

On the other hand, a want refers to something that is not essential for survival but fulfills a desire or enhances quality of life. Wants can include items like luxury cars, dining out, and entertainment. While they can improve comfort and enjoyment, they do not constitute necessities. Understanding this difference is crucial for effective budgeting and financial planning, as it helps individuals prioritize their spending, ensuring that they meet their essential needs before fulfilling their wants.