Welcome to Day 12 of 30 Days To Your Financial Freedom Challenge!
One of the hardest parts of financial crunches is differentiating between your needs and your wants. After all, in normal times, many of our wants feel like needs. It’s normal not to want anyone to tell you that your morning coffee isn’t needed! However, coffee truly is a want and not a need. Let’s discuss further about having a shift in your money mindset to see what is truly and need and not just a want.
Business Expenses
When it comes to a business, there are needed expenditures that cannot be avoided, such as taxes, rent, software, advertising, and marketing, and so forth. Anything that creates the product, sells it and distributes it is a needed expense. The way to differentiate is to pay attention to the return on investment and if there is one, keep it. Check out the Master Your Revenue Planner that helps you keep track of all your business expenses. It’s a staple for my business toolkit and it should be in yours as well.
Personal Expenses
For your personal expenses, choose to keep the things (if you can) that keep you healthy and able to work and function in your daily life. For example, if you need your car to get to work, you better find a way to make the car payments. If you have rent or mortgage to pay to keep a roof over your head and there is not an alternative, you’ll need to find a way to keep paying the costs of living in that place.
Family Expenses
Anything that keeps your family sheltered and healthy is a need. Anything that crosses over into indulgence is not needed. For example, a dinner of chicken, mashed potatoes, and green beans made at home is preferable to going out to eat the same thing due to the price. One is for nourishment, and one is for entertainment. If little Sam takes gymnastics for fun and is not headed for the Olympics, it’s a want.
You can ask yourself several questions to help yourself determine whether it’s really a need or a want.
- Is there a less expensive alternative that will do the same thing? – If you’re at the store and the broccoli is five times as expensive as the spinach, you’ll have to choose the spinach.
- If I don’t have this, will I suffer in regard to my health? – If you have diabetes, you need to take your insulin, but if you’re getting massages twice a week just because you want them, will your health really suffer if you stop?
- Will not having this affect me in the future? – Often, finances can get in such bad shape you find yourself having to put off things you’re used to doing, such as quarterly teeth cleaning. Whether skipping a couple of cleanings will cause long term damage or not should be the question. If so, try not to skip it. If not, go ahead.
- What are the risks associated with not having this thing in my life? – You’ll have to decide whether or not doing without whatever it is, is risky or not by writing down the risks associated with not having it and comparing it to the risks of having it.
- Will I die or suffer and want to die without it? – If you’re addicted to coffee, you may indeed suffer without it. Cut down slowly, and you’ll get the same benefit of ending your addiction while saving money, or you can simply choose to make your own coffee instead of buying it at expensive shops, depending on how deep your financial hole is, you may be able to swap to avoid suffering.
Remember, a need is something you need to stay alive or something you need to be able to do the thing that keeps you alive. For example, if you’re a virtual assistant, you must have your computer, a good internet connection, and certain software depending upon your expertise. But you don’t need a fancy project management suite or expensive funnel software to do your job unless your job is project management and building funnels.
To discover what your true needs I recommend using the Busting Your Money Mindset workbook. It’s a simple but effective workbook that helps you to access what is really necessary and ultimately change your mindset regarding money. If you are stressed and overwhelmed by money I would truly recommend checking out this workbook. What makes this different from say reading a book or even taking a course is that you fill in the blanks of your money problems as you work through the planner. No theoretical solutions only practical tips to get you started with your money journey. The shift in mindset is so important to overcome because it can really wear you down mentally and even physically with stress. There is another way to do things so let me show you how.
Is there any areas of finances that you find particularly difficult to manage? Please leave any comments or questions below.
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