Have you ever been at the store and seen that great deal you just “had to have”? Being that the Holiday marketing is in full swing as I write this surely we have all experienced this lately. Maybe it was a great outfit or maybe it was a shiny new electronic item you’ve been thinking about. At work or in your business maybe it was some new software that was going to make you more effective and efficient. Yeah, it may be a little more than you want, but it will be a business expense so that means you are investing in the business and will get a return.
None of these are bad . . . if we have the cash flow, but whether in our personal or professional financial dealings, three questions may help us to make wise decisions with our resources. Years ago these nifty little plastic items were made which I am sure you are quite familiar with: credit cards. When I was about 18 I had a friend who said something like “these things are awesome, it is like having money without really having it.” Although I still keep in touch with that friend I am not certain whether he created a debt problem for himself or not. A tip I probably should have advised him of back then: If you can’t pay it off when the bill comes, don’t buy it.
What are the three questions you may be asking:
- Is this something I need? – Whatever the deal we are looking at, is it something we need? If our car is broken down with hundreds of thousands of miles on it and we need it for work, then the answer is yes. Now, maybe our car has some minor cosmetic problems that ultimately will amount to less than a thousand dollars for the year. Do we really need that work done?
- Is this something I want? – Something I want may be a new organizing system for my garage which will help me be more efficient and even help me eliminate clutter and be more effective. Do I need it? Not really, but it will help our overall family effectiveness because we won’t have to hunt through the garage for items, but do we have the cash flow for this? If the answer to that question is no, then I need to wait.
- Is this something I simply desire? – Years ago one of our electronic devices broke which we used to watch movies. This was connected to an entire surround sound system. I could not replace the individual device, I had to replace the entire system. Well, I decided it was time for a major upgrade and bought individual components to improve the overall system. This was NOT a need. This was a want, but ultimately it was a desire . . . something I could easily live without. So how did I pay for it . . . with my saved up birthday and Christmas money so it did not impact our family budget, just my personal savings of multiple years.
As you look at that purchase, before opening your wallet ask: do I need this? Do I want this? Is this simply a desire I can live without and the money would be spent better elsewhere? Spending more at the need and want level and staying within our limits will help maintain the financial balance we need to lower stress levels both at work and home. As we are able to keep this stress to a minimum this helps us think better by freeing our creativity and enabling us to lead well. What adjustment do you need to make in this area so you can lead better in other areas?
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