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

Is Your Business Serving Your Life, Or the Other Way Around?

As a business owner, it can be tough to make sure you don’t get caught up in the hustle all the time. I’ve worked with many business owners whose businesses were definitely the main center of their time and attention, but who weren’t really getting their needs met that way. This is really unfortunate to see, yet so common. Today, I’m going to walk through an exercise you can use to evaluate whether your business is serving your life, or the other way around, and then suggest some next steps. Let’s dive in:

Reflect

To evaluate whether your business is serving your life, or the other way around, there are many different questions you can ask yourself. I recommend setting aside at least 20 minutes to reflect on a few of these questions. Pick whichever call to you:

  • How are my needs being met by my business?
  • What is my primary emotion while performing business tasks, and why?
  • What needs are being fulfilled by my business? Which are not?
  • Do I gain anything by running my business? Do I miss out on anything?
  • Is there balance in my life between all the different roles I play (ie. business owner, friend, partner, etc.)? Which role do I spend the most time in?
  • What are my goals in life? Is my business helping me get closer to reaching them?

Re-evaluate

Once you’ve sat with those questions, you will have a clearer idea on where your business might be running your life. Balance between your business and other parts of your life might be out of whack, or maybe you simply aren’t getting paid enough. Now that you’ve acknowledged the issue at hand, it’s time to re-evaluate. Ask yourself, “How can I re-orient my business so it serves my life?” Start thinking about and researching new strategies you can use to close the gaps between your needs and what your business is providing.

A couple pointers for inspiration: if you feel like you’re not getting paid enough, check out my article on considering your hourly wage and my article on creating an owner’s paycheck. Another good place to look for solutions is my series on money-mapping.

Take Action

After you’ve researched and thought through strategies, it’s time to take action! Your business doesn’t need to run your life. Acting decisively to end this cycle will only help you. Whether it’s opening a separate account or deciding on a day every week where you look at your numbers, any action you take is a step in the right direction. If you work well with an accountability partner, you might enjoy my profitability coaching services. Feel free to schedule a call with me to see if we’d be a good fit.

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Angela