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Mmmmmmm. Donuts. They’re sitting right there, in the break room, calling to you. All that sugar and gooey glaze dripping off the side. The pretty sprinkles make you happy just thinking about them…………..one donut won’t hurt. In the big picture, what is one silly donut. A few extra calories. Big deal. I’ll walk around the block at lunch and burn it off. It’s right there, and you’re hungry……you skipped breakfast. It can get you through until lunch. The next thing you know, you have already eaten half of it.
It’s true that in the big picture, one time isn’t going to hurt. But what about the next time? What if you started to make it a daily habit? Would eating donuts everyday eventually change your health? That is the tricky thing about bad habits. Once you start down the road, there isn’t a bright line between when it isn’t really effecting your health and when it becomes a problem. There isn’t a siren that goes off when you eat the 27th donut……..26 was fine, but now you have gone too far. But what is clear is that donut eating isn’t adding to your health.
There are a lot of comparisons that I make with the diet industry. It isn’t that we don’t know that eating donuts isn’t a healthy thing to do. There are reams of information out there about physical and financial health. It isn’t that there isn’t enough information. If all it took was information, we would all be skinny and rich. We don’t need more information, we need wisdom.
So think about your physical health and your financial health. To be physically healthy, you need to eat nutrient dense foods. But often times, these aren’t the ones that we want to eat. The same is true with your spending. You need to spend in a way that is productive……………but sometimes we just want to buy something fun, or flashy.
The issue isn’t that the donut is going to kill you. It’s just that eating empty calories means that you either have to give up nutrition or gain weight. If you eat fewer calories to make up for it, those calories that you aren’t eating are ones that have the nutrients that you need.
Your spending is the same. One little indulgence here and there isn’t really the problem. It is the constant stream of little indulgences that add up over time that cause the problem. Spending on those things means that you don’t have room for the other expenses. Expenses that could actually be productive. Spending that could bring in more money in the long run over time. This is the essence of the art of spending. Getting the most for the money spent.
I read a recent article that talked specifically about the different kinds of expenses. You can read the whole article here. I liked the way the author described 4 basic types of expenses. You can apply these categories to your business as well as your personal life. And for most small business owners their business and personal life are intertwined.
Destructive expenses
These are the wasteful kinds of expenses, any thing that doesn’t add value. Overdraft fees, using credit to consume, spending on vices, or products or services you don’t use or that don’t add value to your life are all are expenses that you most likely want to cut out entirely.
Rainmaking (productive) expenses
Productive or rainmaking expenses are how you make money. Spending more money on the right employee, the right equipment, the right marketing campaign or the right mastermind group can pay for itself over and over again.
Spending money here makes you more money.
Protective expenses
Protective expenses are how you safeguard your family, your business assets, your productivity and your way of life. Things like a personal emergency fund or reserves in your business. More examples are life insurance, disability insurance, medical insurance, plus auto and home insurance, too.
You don’t want to lose what you have worked so hard to gain, if there is a way to protect it. Having the proper protections in place can actually help you with your productivity too. It can eliminate stress that comes from worry and robs you of productive thoughts.
Hard to measure, but so true.
Lifestyle expenses
Lastly, lifestyle expenses are important, too, and not something to avoid. Vacations, dining out, the latest iPhone or gadget, special experiences with your family, these have the power to rejuvenate your spirit and help you to enjoy life along the way. They’re also the reason you work so hard in the first place.
The only caveat is that a lifestyle expense must be managed well, which means it’s best to pay in cash, and do all you can to avoid using credit.
You can look at the different kinds of expenses like different kinds of food. Not all food is the same. Some have more nutritional value than others; different nutrients that you need in different quantities. Spending in each of these categories is like eating from the different food groups. All of them, except the destructive ones have a place on your plate.
Now, review your most recent expenses. Which categories do they go in to? You have to get real here. It is easy to justify a lot of things that we want by calling them investments. That’s a trap. Think about what things you have justified this way. Now think about what kind of return you are getting on those expenses. Not everything turns out as we plan. The key is to get better at identifying true investments rather than lifestyle expenses. Your business has a lifestyle too, that isn’t just you personally.
Having the right proportions of each, and not letting any category control is the key to the balanced financial diet. Even a donut is ok once in awhile. A donut once in a while is a lifestyle expense……..unless it crosses the line, and becomes destructive. Then they need to be eliminated. Keep the balance.
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