“I spent that much?”
When I looked over the numbers of 2007 (I like to get the tax crap over early), that was my first reaction. Especially when I hit the “books” category.
I’m not alone in my reaction. This stunned question runs through many people’s minds when they realize how much they spent over the year on various business expenses. A book here, a book there… Maybe it was subscription costs or membership fees… advertising… marketing… you name it.
Pennies add up quickly into dollars – sometimes a lot of dollars. Keeping track of your business expenses is worth it. It’ll save you wondering how you ever managed to blow so much money – and help you make more money.
Budgeting, not butchering.
Everyone hates budgets (I do), but they’re necessary evils that help a business thrive. They’re also misunderstood tools. A budget is really just a pre-planned allocation of potential revenue based on past income and past expenses.
Budget doesn’t have to be about tightening your belt. A budget does help you have a clear picture of where you spend your money and what sort of money you’re really making.
Trust me – what you think you currently net is probably an inaccurate amount.
Budgets don’t mean doing without, but if you want more money in your pocket, it makes sense to limit your spending. Tally up all the expenses you made last year. Assume you’ll spend in the same areas this year, but limit your spending.
Hold on, though. Don’t be too drastic chopping expenses away. You’ll resent the restrictions and eventually blow your budget. When you do spend, spend wisely.
Worth versus Cost
Wise spending means making good investments. That ebook is only $15, the membership a mere $25, and that course is just $9.99. A bargain!
But if those expenses don’t help you increase your income, your client base, your services or your efficiency, the cost isn’t worth it.
For each expense, ask yourself, “What am I going to get out of this?” Determine its worth – what you’ll get out of it – versus cost – what you’ll pay for it.
Then spend… or not.
Cut the Fluff
A good writer says more with less. A good businessperson spends less for more.
For each expense, ask yourself, “Do I really need this? Or do I just want this?” We’re often swayed into buying stuff we don’t need because it looks great, sounds fantastic and seems like it might help us. It’s easy to cave to impulse buying.
Make a point to wait two days before buying. That all-important purchase often doesn’t seem so necessary after a few hours have passed. If you must buy, be sure you can return the item, get your money back or cancel the membership if it’s really not worth the money.
Don’t Lose Sight of the
A small, monthly payment deducted right off your credit card isn’t a big deal. That low fee sweeps past conveniently each month – and you probably didn’t even notice.
Always look at the forest – the yearly cost –of any payment commitment. Don’t focus on the tree – the monthly cost. $12.99 a month is pretty easily absorbed. When you consider that’s $150 per year year, you might not be so tempted.
Plus, you can get a pretty hot blog theme for $150 bucks.