I’m a saver. I like to hoard my income and watch it grow — and I’m extremely frugal about spending money. But I wasn’t always like this. When I was younger, I hated doing laundry and loved shopping the clearance racks. Every time I saw an outfit on sale for a few bucks, I’d add it to my already-full closet. Sure, it saved me from doing a weekly load of laundry, but it ate away at my bank account and led me to rack up some nasty credit card debt.
Once I paid off my bills, I vowed to change my spending habits. Instead of throwing money away, I refused to use it, saving everything I could and feeling guilty every time I bought something. But my wavering attitude with finances wasn’t getting me anywhere. I needed to learn how to develop a positive relationship with money, especially when I started my business.
What’s Your Relationship With Money?
Before you spend money, stop and consider how spending makes you feel — and why you feel that way. Are you anxious when you shell out cash on any purchase, no matter how big or small? Do you find yourself running for retail therapy when things get tough? Are you hesitant to invest financially in your success? Would you rather bootstrap everything so you don’t have to pay others to do the work for you?
Use these questions to understand your money mindset. If you’re a binge spender or cash hoarder, you may want to work with a mindset coach who can guide you toward a better relationship with your money.
Smart Spending in All Aspects of Your Life
The other day I had a conversation with a friend who complained about how much money she spends on her skin care routine. She kept trying new drugstore cleansers, but they were all making her face break out. “The only thing that ever worked for me was the expensive $30 face wash,” she said, “but I don’t want to spend that much every month or two.” Think about that for a second: She was regularly buying $10 to $15 products and throwing them out when they didn’t work. She estimated that she bought four different products that month. Why regularly waste money on something that doesn’t work when you can spend a little more for a solid product you purchase less frequently?
The same theory applies to how you spend money in business. You may think the cheapest social media scheduler is the best option, but if you have to purchase two different subscriptions to manually do the job of one automated product, you’re wasting money. Your website is another place where it’s important to choose quality over a low price. A free system might get you started, but to be taken seriously, you’ll probably need to hire a professional designer and developer.
Consider Your Return on Investment
If there’s one thing I don’t mind spending my money on, it’s education. There’s always a return on investment when it comes to expanding your knowledge. Going back to school for a graduate degree was the best decision I made for my career. Now, years later, I take every opportunity I can to gain some smarts. The best part about it? Anyone can learn, regardless of your income level.
If you’re new to the indy life and only making the bare minimum, buy a few business books that you can dive into. Once you’re a bit more established, try a self-guided class or a group course. And when you finally have the funds to really invest in yourself, consider working with a coach, investing in trade training or attending big, well-known conferences.
How Spending Money Can Make Your Job Easier
I often tell people in my mastermind group that time is more valuable than money. As a solopreneur who runs a business and a home, I’m constantly struggling to squeeze any working moment out of a day that’s jam-packed with kids’ activities and family responsibilities. If I can hire someone to complete a task in one hour that will take me three hours to do on my own, you better believe I’ll pay them to get the work done.
Think about your business. Where can you spend to save time? Maybe you’ll hire a virtual assistant — but don’t stop at contractors. Think of supplies and products, too. If you’re a landscaper and your mower needs replacing, buy a new one. Going over the same patches of grass or spending time fixing the blades and mechanics costs you money regularly. If you’re a photographer and your lenses just aren’t living up to what you want them to do, trade them in and purchase higher-quality products. Remember, some of your business spending will qualify as a tax deduction.
Now, don’t think I want you to just throw your money out the window. I know how hard it is to start a company and assume all the responsibilities of a traditional business, like managing IT, HR and customer service at the same time. Saving the money you earn is key in the early days. Save as much as you can now, and you’ll have more spending options later. Just remember: While saving is virtuous, knowing how to spend wisely is equally important.