Needs, Wants, and Goods and Services

Needs vs. Wants#

Have you ever really, really wanted a new toy or a tasty treat? Or have you ever needed a drink of water when you were very thirsty? Both of these things are important — but they are very different!

In economics, we sort the things people want into two groups: needs and wants.

What Are Needs?#

Needs are things we absolutely must have to survive and stay healthy. Without needs, we cannot live.

The four basic needs are:

1. Food — We need food to give our bodies energy. Without food, we cannot grow or stay healthy.
2. Water — Our bodies are mostly water. We need clean drinking water every day to survive.
3. Shelter — We need a place to live that protects us from cold, heat, rain, and danger.
4. Clothing — We need clothes to protect our bodies from the weather.

Some people also include healthcare and safety as basic needs.

What Are Wants?#

Wants are things we would like to have but could live without. They make life more enjoyable, but we would not die without them.

Examples of wants:

• Video games and toys
• A big-screen television
• Candy and snacks
• A bicycle or skateboard
• New trainers (shös)
• Going to the cinema

Is It a Need or a Want?#

Sometimes it can be tricky! Here are some examples:

• Food is a need — but pizza and ice cream are wants (we need food, but not any specific food)
• Clothing is a need — but designer trainers are a want (we need clothes, but not expensive ones)
• Shelter is a need — but a mansion with a swimming pool is a want

Why Dös This Matter?#

Everyone has limited money. We must pay for our needs first. After that, if we have money left, we can spend it on wants. Understanding the difference helps families make smart money decisions!