The 4 Components of a Restorative Money System

The purpose of your money system is to help you meet your financial needs and keep things organized. A good money system is financially and emotionally restorative. It helps you keep your money going where it needs to go, and it keeps you from stressing. It helps you integrate your personal and business finances seamlessly and without worry. There are many different mechanisms to a money system that help us achieve these objectives. Today, let’s talk about the 4 key ones:

A Spending Plan Aligned with Your Values

Having a clear spending plan that helps you align your expenses with what you care about most is an essential part of a restorative money system. Take the time to assess what you value most in your life, what feels best to spend money on. Oftentimes, there are things we’re paying for regularly that we don’t really value, or that don’t add value to our lives. Discerning the underlying desire beneath your expenses can help you better define your values. For more thoughts on this concept, I recommend reading
The Soul of Money by Lynn Twist.

Once you’ve assessed your values, it becomes easy to cull what doesn’t truly align with you from your spending. From there, you can make the moves to create a spending plan that will keep you on track financially, and in alignment emotionally.

Clear Income Target

Another wonderful thing about creating a spending plan is that going through the process means you get a good idea of what your monthly cost of living is. This means that you have what you need to create a clear income target for your business that corresponds to your tangible needs. Having an income target grounded in your financial needs and goals is a restorative element of your money system because it keeps you in touch with your reasons for putting in the work to take care of yourself financially and run your business. It’s much more powerful than the grand-but-vague “have a 10K month!” approach, because it’s personalized. Your income target reflects the amount of money you need and the amount of work you need to do to live a life aligned with your values.

Your Money Why

Absolutely key to a money system that seeks to restore and enrich your life, your money why is the purpose of your income. This is especially important for business owners, because whether your business is your side-hustle or your full-time income, your income needs a purpose. Vague goals like, “make extra money” tend to have vague outcomes. Your money why is a clear goal or intention you plan on using your income for. After thinking about your values and desires, identifying your money why is simple. For example, maybe you value adventure above all else, and you want your business to make enough to support you and pay for a grand cross-country trip. One of my values is family, and I started my business to support my daughters as they went through college.

Your money why is connected to your values, but it’s goal-based. It ensures that you have a goal connected to your money system that will lead to fulfillment and financial growth. It could be paying off debt, a big purchase, or supporting your family. Whatever it is, your money why keeps you focused and helps you create a good life for yourself.

All Needs Met – Especially Yours

A restorative money system helps you stay organized and save to meet needs – yours and your business’s. This means having a system that helps you save for taxes, pay operating expenses for your business, and pay periodic expenses in both your business and personal life. A restorative money system also prioritizes its creator – you. Your money system should not only account for those important expenses, it should also provide a regular paycheck for you as the owner of your business, even if you have fluctuating income. My ideas around this aspect of a money system are based on Profit First. This system also calls for a way to collect a portion of your income as profit, and distribute it to you, the owner, as a reward for your hard work every financial quarter.

If you enjoyed these ideas about a restorative money system, you will probably also like my series on money-mapping. Here’s part 1, part 2, and part 3 of that series. If setting up a system sounds like the thing to do right now, but you’d like to work with an expert accountability partner, check out my offering, 4 Week Refresh, which is designed to help business owners review 2020 and plan for 2021 from a systems perspective. I’m offering this through the end of January and I invite you to join me!

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Angela

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