Needs are essential for survival, while wants are desires that are not crucial. Distinguishing between needs and wants is essential for managing finances effectively.
Needs refer to basic requirements for survival such as food, clothing, and shelter. They are essential and necessary for an individual to live and function in society. Wants, on the other hand, are desires that are not crucial for survival, like luxury items or leisure activities.
For example, a person may need shelter to live, but wants to live in a mansion. Distinguishing between needs and wants is important in personal finance to make wise spending decisions and prioritize expenses accordingly.
Understanding the difference between needs and wants helps individuals manage their finances effectively and allocate resources to fulfill essential requirements before fulfilling desires or luxuries.
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