Items you will need
When planning a budget, it is sometimes difficult to tell between a need and a want. It is especially hard, because needs and wants differ for each person. What one person deems a necessity, another person calls a frivolous want. With a little practice, you can determine for yourself what your needs and wants are.
Learn to Recognize a Need
If the item is necessary for your survival, it is a need. This includes things such as basic shelter, clothing, food and water.
Ask yourself if the item is necessary for reasonable living. You may not 'need' something to survive, but you may need it in order to maintain a basic living setup. You don't need to take a shower to survive, but most of us consider that necessary. You don't need electricity, but most would consider it as such. This category is open to a bit of interpretation, as each person must decide for him/herself what is needed for living.
Ask yourself if the item is necessary for obtaining and maintaining employment. You may not need a car to get to work, but you most likely need transportation of some kind. You may not need the latest fashions for your work clothes, but you probably need a few clothing items that are suitable for work.
Decide if you need the item to keep your house functioning. If so, it is probably a need. The place you live probably requires that you pay for utilities such as electricity, water, gas, trash and sewerage. While these aren't strictly necessary for survival, they most likely fall into the need category. But cable TV, Internet and other luxuries, on the other hand, are probably wants.
Take some time to write out your current needs. It helps to see them on paper.
Learn to Recognize a Want
Learn the definition of a want. A want is basically something you have a strong desire for but isn't necessary for maintaining life. Wants include entertainment, extra food beyond what you need (eating fast food, dessert, extravagant food) and more clothing than you need.
If you can live without it, it is a want. If you can do without it for a few days, you're probably looking at a want. A need, on the other hand, is usually necessary on a daily basis - food, clothing, water, etc.
Take time to write out what you consider to be your current wants. That way, you can see at a glance what is necessary now, and what is a 'want' that can wait a while if needed.
You can feel a strong psychological need for something, but that doesn't make it a need - our desire for wants can be very powerful. There is nothing wrong with having a want. It's just important to understand that it is a want, and not a need.
If you are budgeting, make sure to allow for wants as well as needs. If you restrict yourself only to needs, you'll probably end up blowing your budget.