Frivolous Spending or Wise Investment? How to Tell the Difference
Let’s just say up front that I am not a numbers person. I avoid math as frequently as I avoid feta cheese–all the time! I realized many years ago, though, if I wanted to be a “real” entrepreneur, I needed to take note of the numbers. I had to move away from the “bookkeeping” method of tossing receipts into a file box and hoping for the best when tax time rolled around.
I knew I needed to set up separate bank accounts. I also knew I needed to work with someone who embraced numbers as tightly as I pushed them away. I needed to stop spending money like a drunken sailor in case the bottom fell out and I had to resort to dressing Henrietta in last year’s outfits (gasp!).
An accounting professional was one of the first professionals I added to my business team. I wanted someone who could take my number mess and turn it into a lovely, working budget… and she did. I work with pet lover Kelsa Dickey of Fiscal Fitness and she got me on track with budgeting, spending only what I needed for my business, while leaving me some “mad money” for those impulse purchases that we all want to indulge in.
We also talked about how I needed to stop frivolous spending (Vera Bradley purses, anyone?) and decide whether what I was spending money on was a wise business investment (online classes, coaching sessions, business books, etc.) or if it needed to be curtailed. It was eye opening because there were some items I’d avoided paying money for because I deemed them “not necessary” and other items I purchased as soon as they came on the market because I was convinced my business would benefit (tech gadgets galore). Frivolous spending or wise investment? Let’s explore how to tell the difference.
Advice for whether an expense is necessary or frivolous
Ask yourself, “Does this expense help me generate more revenue?” Another way of asking is, “Will this expense add value to my business or my services in some way?” You want to be able to say “yes” as often as possible. An expense that has the potential to bring in more revenue is the IDEAL expense!- Shoot for one “frivolous” expense every month (or another time frame)… the idea is that you allow yourself SOME wiggle room but you know you’ve put a limit in place, too.
- Shoot for one in ten: Out of every ten purchases, one can be frivolous or purely a want and the rest need to be value-added.
What do you consider necessary expenses for your blog or business? Do you ever splurge on a “want” instead of a need? How do you tell the difference between the two?
Robbi Hess is an award-winning author, full-time writer, newspaper columnist, writing coach and time-management guru. She works with bloggers and solopreneurs and blogs at All Words Matter.
