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Understanding needs and wants

Knowing what we need versus what is nice to have helps us handle new responsibilities and manage money as we grow. Here are some suggestions to help you learn the difference.

Cats and dogs eat food and drink water every day. They also sometimes play with squeaky toys. Pets need food and water to survive. Pets want things to play with, but they will be okay without them.


Now, think about a car. A car can drive without polka dots painted on it, right? But, it cannot drive without petrol or a charged battery.


In some ways, humans are no different from cats or cars! There are some things we must have to keep going. Then, there are other things that might make life more fun or exciting – but we would still be alive and well without them.


Understanding the difference between needs and wants is important

As children, parents or caregivers cover most of our basic needs. But as we get older, we start to take care of some things on our own.


Maybe we buy our own school lunches or get to go shopping with friends.

Here are some examples of things we need

  • Healthy food and clean water

  • Clothing to keep us covered and protected from the weather

  • Somewhere to live

  • Books for learning at school

Here are some examples of things we might want

  • Ice cream

  • A skateboard

  • Online games

  • Cuddly toys

How to tell the difference between a need and a want

Ask yourself these questions to help decide if something is a need, or a nice extra:


Do I need this to stay safe and healthy? If yes, it is probably a need.

  • For example, fresh food like fruits and vegetables keep you healthy, so those are needed.

  • Having a doughnut after you’ve eaten a healthy dinner is an extra treat, so it is a want.


Will something worrying or serious happen if I don’t have this thing? If yes, it is probably a need.

  • For example, you can’t go to school without your uniform or books, so those things are needed.

  • If you don’t decorate your books with stickers, you can still go to school, so stickers are extras, or wants.

What happens when we only buy what we want?

Imagine your parents gave you money for lunch and you spent it all on stickers. You would be very hungry.


Or, if you needed to take the bus, but got a doughnut instead. You wouldn’t be able to get home!


Spending money only on things we want means that we don’t have enough for what we need.


It is important to use our money to take care of our needs first. If there is anything left over, we can use that for our wants.

Quiz time: Find the needs

Have a look at the below items and decide which ones are things you need. Scroll to the bottom of the page for the answers.


Drink of water

Video games


School books


Activity time: Spend the money on needs and wants

Decide how to spend $10 on the below items. There are many choices, and it is up to you, but you want to make sure that you cover the things that are needed before anything extra.

Bus ticket $3

Lunch $5

Ice lolly $1

Toy $1

Online game $2


Quiz: Apple, drink of water, house, schoolbook.


Activity: You need to get the bus ticket and lunch first. Once you have purchased those, you have $2 left to spend on either the ice lolly and toy, or the online game.

You may find these useful

Your first guide to pocket money

And how to manage it well.

What are banks for?

Learn all about what Australian banks do.

What is a budget?

And why is it useful to have one?

Things you should know
This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice.