Using motivation theory to re-boot your spending habits
Whether you are planning to start a business or have been running one for a while, personal cash flow can be a major stress point.
And that is the thing about a business you don't have a guaranteed salary every month. You can have great years and weak years. Therefore, addressing your financial health can help towards minimising stress while running a business.
Taking time to look after your mental health is extremely important and often forgotten with the volume of noise business owners have to deal with.
Looking to motivational theory
Anyone who has done any form of business studies may have come across the concept of Maslow's Hierarchy of needs. While not a perfect theory (developed before the age of social media!) there are elements you could look to with regards to aligning needs with your spending.
Ultimately why do we earn money?
Unless you can be self-sufficient or have rather a wealthy family, we need money to survive. We don't need 3 cars or 15 designer handbags, but we do need at least to feed, wash, cloth and shelter ourselves. Therefore looking to these basic needs, I find is the best way to start budgeting.
I am not saying anything new here, people can save £1000's a year with better management of basic spend. Yes, there are compromises, but that is life. You could live in the centre of town but pay twice as much in rent, is that cost really worth it?
Below is a short video with some suggestions for looking at managing your costs starting at the basics and working your way upwards. At each stage, how can you align your needs with your budget?
What is important to note is that you have to apply this theory to you. You may have certain spends that really enrich your well-being, which is not a luxury to you. Getting a blow dry once a week can have a real impact on your self-esteem. Therefore, could you make savings elsewhere?
Such as batch cooking some meals - more nutritional plus cheaper than ready meals. Bring your lunch to work a few days a week instead of popping for a take-out daily. Even walk instead of an unnecessary taxi from time to time.
Good budgeting is about balance and patience. Yes, I could buy 10 items of clothing for £100 but how long will they last? Instead, wait a few months for the sales and getting 2/3 decent pieces. Which over time will be more cost effective and better for the planet! It will take longer to build a wardrobe but your overall spend on clothing will come down.
As most people only wear 20% of their wardrobe, that is a lot of money to be saved:) It might be a shock to the system, but you can change gradually.
Making the change
There will be times you will falter and that is OK. With any change don't get discourages. Remind yourself:
1. After taxes, you earned your money. Never be bullied into spending outside your budget.
2. Forget the Jones, they are often up to their necks in debt.
3. Focus on what you get real value out of. A walk in the park with family is free.
4. De-clutter at least twice a year. A great way to remind yourself of what not to buy.
5. Any savings should be locked away in a saving account.
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