For instance, buying a new smartphone because it appears stylish is classified  as a want, while purchasing food is considered a need.

How to Understand :  

Wants represent optional expenses that improve quality of life but are not essential for

daily living .

Importance :

Understanding wants facilitates better budgeting by clearly separating essential needs  from discretionary wants.

It helps control overspending, ensuring that financial resources are used wisely.

Recognizing wants supports the achievement of long-term financial goals by allowing for  better allocation of funds.

This understanding encourages mindful purchasing decisions, prompting careful  consideration of the necessity of each purchase  It encourages mindful purchasing decisions, prompting you to think about whether you  truly need the item.