The One Indispensable Spending Guideline: Needs Vs. Wants

One spending guideline that is indispensable is identifying your needs versus your wants. Difficulty understanding this can result in either over-spending or over-saving. Ultimately, it can reflect a lack of clarity around our values around money. If you feel stumped by this concept, or aren’t sure how your spending behavior measures up, don’t worry! We’re going to parse out the details right here:

Needs vs. Wants

Many of us are familiar with differentiating between needs and wants. It’s a skill we cultivate throughout our lifetimes. Although we sometimes run into pitfalls, we are ultimately making thousands of decisions a day – it’s important to have a little compassion for ourselves when we’re thinking about our financial decision making.

So, what makes a need, a need and a want, a want? Basic necessities you need to take care of yourself and live with a certain degree of comfort are needs. Nutritious food, sound housing, quality clothes and shoes, and things like electricity, car insurance, etc. definitely fall into the need category. We also have needs related to caring for ourselves. This is where things can get tricky – many people have difficulty differentiating between needs and wants here. When considering a purchase, it can be helpful to try and identify the underlying need. For example, if you want to spend money on a day-long spa retreat, but what you really want is some quiet time to yourself, there are likely other ways you could meet that need. Especially if it’s a matter of staying in your budget or not, sussing out the need underlying the want can be very helpful.

Over-spender, or Over-saver?

You may have some idea of whether you fit into either category. If you’re not sure what over-saving is, I recommend reading my article about it – it could be enlightening. When it comes to identifying needs vs. wants, over-spenders and over-savers tend to behave differently. Over-spenders frequently feel every purchase is filling a need, while over-savers tend to see every potential purchase as a want. In both cases, these spending habits can cause problems. Over-spenders can find themselves without important savings accounts or in debt, while over-savers can hold off on essential purchases like medical expenses. Both behaviors result in a deficit of self-care. To really take care of ourselves financially, we need to find a midpoint, where we have our needs met, and a few of our wants too. Someone who has really good thinking about this is Vicki Robin, who speaks poetically about finding your “enough” in Your Money or Your Life. You can read my book review here.

I hope these thoughts will help you examine your own spending behaviors. If you’re interested in a little more self care, check out my Facebook page for Financial Self Care Fridays, all month at 8am PST via FB Live. I’m providing prompts and accountability to help you develop a financial self care habit. I hope you’ll join me!

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Angela

Image by: Artem Beliaikin

How to Set Informed Income Goals

How to Set Informed Income Goals: At Peace With Money

This article is the fourth in a month-long series on taking care of your finances as self-care. Specifically, I’m focusing on what you can do with your money to take care of yourself and improve your business in 2019. You can read the whole series by clicking here. 


One of my favorite sayings comes from the artist-turned-business mind Jennifer Armbrust: “A business is a needs-fulfillment machine.” Your business exists to support you; to fulfill your needs. However, if you don’t have a clear picture of what those needs are, it can be difficult for your business to fill them. This week, I’m suggesting that to really financially care for ourselves, we investigate the true costs of our lifestyles. By doing so, we will be able to make informed decisions about what income goals we’d like our businesses to meet. 

The Process

Time to take a realistic look at how much money you’re spending every month. Dig up the past three months of your bank and/or credit card statements. (For most of us, these should be available online). Go through line by line to see where your money is really going. Total up all the expense categories, i.e. groceries, utilities, rent, etc. 

Once you’ve got your totals, you have a realistic picture of how much money you need on a monthly basis. At this stage, you may find it helpful to look critically at your lifestyle, and see if there’s anything you’re interested in culling. If you’re looking for some ideas around creating a budget or spending plan, I’d recommend these articles of mine. Click here. 

Set Informed Goals

Whether you decide to create a spending plan and reign in your expenses, or feel satisfied with your lifestyle costs, you now have a complete picture of your financial needs. At this point, you can now set informed income goals that are designed to meet those needs in your personal life. Without this crucial information, your goals will just be shots in the dark, aimed at an amount of money that “sounds nice” but doesn’t tangibly satisfy a need.

Additionally, once your have this information, you can also take a look at how your business is doing in its current state. Is it making enough to support you? Whether you’ve got a side hustle or something you want to stretch into a full source of income, checking in with this question is important. If your answer is no, you can start to strategize around how you might close that gap. For more ideas on this, check out this post.

I hope this post inspires you to keep working to create a business that truly meets your needs. If you’d like to work with an accountability partner or need coaching around this, please check out my service packages and don’t be afraid to schedule a curiosity call!

Angela

Image Sources:  rawpixelMelissa Askew

What is the Feminine Economy?

What Is the Feminine Economy? At Peace With MoneyAs someone who’s been involved with finance throughout my career, I love hearing about and researching new financial ideas. When I came across Proposals for the Feminine Economy, a talk given by Jennifer Armbrust, it piqued my interest. Immediately, I began to see the parallels between Jennifer’s ideas and Profit First ideology. Today, I want to share these parallels and discuss how we can apply these ideas to our business as solopreneurs!

Money as Water, Business as Art

Jennifer speaks about thinking of money as water, flowing where it is needed. She maintains that a business is a “needs-fulfillment machine.” To me, this aligns directly with the Profit First philosophy of creating a business that meets the owner’s financial needs. My objective is always to help my clients align their business profits with their life goals. This includes making sure their business is supporting them financially and meeting their needs!

She also suggests that we treat business as art, as a process of experimentation. She encourages everyone to monetize their natural skills and abilities and build business structures that allow for growth. Her emphasis clearly lies on building business and a larger economy that meet the needs of the people running them. In her book, room for growth and meeting personal goals are also needs that a business can serve to meet.

How Can We Use This?

First, if you haven’t viewed the talk yet, I suggest watching it! Jennifer’s solopreneur story is one full of creativity and inspiration.

Next, take some time to think over these ideas and apply them to your business. Perhaps it might be helpful to list out all your needs. Think about things like time spent with your family and doing social activities, your involvement in your community, the amount of money and time you’re able to give to causes you care about, your diet, health and exercise, time for creativity and expression, yoWhat is the Feminine Economy? At Peace With Moneyur spiritual needs, etc.Which of these needs is your business meeting?  Which ones are not being met, and how could you adapt your business to better serve you in that area? What are your goals? Is your business helping you meet those? Answering these questions can help you discover whether your business is truly supporting you in all the ways it could. Approaching your business with a creative eye can help you create something more supportive. That’s Profit First in action!

I hope these ideas have piqued your interest just as they did mine!

Angela

Image Sources:  Omar Lopez , Hian Oliveira