Need vs. Want, basic economics or should I say toddler economics. When babies are still shiny and new, they only know needs. The need milk, dry diapers, affection, no pain and sleep. When they need one of these, they cry until we figure it out. Eventually, and I'm not sure when it happens, they know they "want" something. Somewhere in the evolutionary path, this wanting stays in our brain and often perks up and runs ruin in our budgets.
The obvious examples of want vs. need are simple:
- Do you need a new cell phone or just want the latest technology?
- Do you need another purse or will last season's work as well?
- Do you need to buy brand name groceries or will the house brand give the same nutrition and flavor? It is really that simple.
I like to start here, because if your budget is all need and no want you will feel like you are on restriction all the time. Even the most restrictive budget will have some "want" in it for sanity sake.
Here are Budget Tips to get your started making next year better!
- Identify income sources you know will happen and high probability likely sources. Keep it real.
- List your current expenses. Everything. Make sure you have included spending that is auto pay on your business checking or credit card.
- Now identify any quarterly, semi-annual and yearly payments.
- Develop a method to track cash. Many small businesses use petty cash, but fail to really record it correctly. Go to Petty Cash for an explanation of how a petty cash system could work.
- Create your accounts. You can find accounts in books and online at many places. If you are using accounting software like QuickBooks, the basic accounts will often get you going in the right directions.
- Develop realistic written goals. Knowing why you are doing a budget just helps. If your business goal is to launch a new product, knowing when and how much will be needed may be important.
- Include others in this process. If the art department is going to be expected to follow a budget, then they need to have input into the budget.
- Hold yourself and staff accountable. Teamwork really works here. A regular staff meeting that identifies how the company is doing compared to the budget many help all departments work together and hold each other accountable. For the solo-entrepreneur, find an accountability partner.
- Blame is not the game. Figuring out "why" an area of your budget is over is more important than "who messed up". Seldom does one person cause a budget to fail - it is usually the unspoken participation of many.
- Celebrate your success with the team and your accountability partner. This may be one of those little extra wants that makes sense - just be sure you don't blow the budget on rewarding the budgeters.
Often we want something ABOUT what we want, rather than the object itself. For example, we can't all be ballet dancers, yet we could bring more beauty and grace into our life.
Try this exercise from Dr. Phil McGraw:
1. What do you want in life?
2. What must you do to get it?
3. How will you feel when you get what you want?
Use the answer to 3. to start over, putting it as the next number 1.
2. What must you do to get it?
3. How will you feel when you get what you want?
Use the answer to 3. to start over, putting it as the next number 1.
EXAMPLE:
--->1. I want a red sports car.
2. I must save a lot of money to get one.
3. I will feel special when I'm driving in it. So, this answer becomes your new #1
2. I must save a lot of money to get one.
3. I will feel special when I'm driving in it. So, this answer becomes your new #1
3 -->1. I want to feel special.
2. I must set myself apart to get it.
3. I will feel exceptional. - What you want is
3 -->1. I want to be exceptional.
2. I must be a master at what I do.
3. I will feel like I made a difference.
What you really want is not the car, but to make a difference. You can keep this up until real clarity unfolds, or stop here and seek "What you must do" to make a difference.
Budgeting and planning requires you to know what you really want!
