A need is something you genuinely can't function without; a want is everything else, however much it feels essential in the moment. The line sounds obvious and is sneakily hard — a phone is a need, the newest model is a want; food is a need, the third delivery this week is a want. Drawing that line honestly is the skill that makes every budget actually work.
Ask what happens if you don't buy it. Miss rent and you lose your home — a need. Skip the upgrade and you keep the working version you already have — a want. Most spending traps live in the blurry middle, where a want is dressed up as a need ('I need it for work').
Because a budget like 50/30/20 depends entirely on sorting spending into needs and wants. Misclassify wants as needs and the whole plan inflates — suddenly everything is 'essential' and there's nothing left to save. Honest sorting is what frees up money to put to work.
Not at all. Wants are most of what makes money worth earning — the point isn't to eliminate them, it's to fund them on purpose instead of by accident. A good plan leaves real room for wants, just not at the expense of needs and your future self.