How do you apply value when your budget changes?

Value is subjective – we each attribute value differently based on our likes, dislikes, and experiences. Furthermore, how we feel about money and ourselves plays a crucial factor. In Successful Business Minds, I discuss this in more detail but something else I have noticed recently is that when our budget changes (for example, our partner is made redundant) what we value changes, based on our new financial needs.

Value changes based on how much money we have.

For example, generally speaking, if you perceive yourself to have an unlimited amount of money, whilst you will still assess what you spend (and what’s valuable to you) based on your likes and experiences, if you need something you may not care about the price so much* however, if you don’t need something you will want it for free or as cheap as possible.

If on the other hand, generally speaking, if you perceive yourself to have a limited amount of money, again your likes and experiences play a role and if you don’t need something you will want it for free or as cheap as possible, but if you do need something you will be more inclined to take time out to assess the value of it*. This can slow down the whole shopping experience, therefore, it helps if you are able to do this quickly! Read on for a guide.

You will way up how much money you have (and how much you can borrow) versus the return on the expenditure (i.e. what you will get back).

*It is important to note that if your emotions (desires for the ‘thing’) are strong, it’s likely you will make this decision very quickly without consulting, what I call our cognitive mind, and when that happens you will feel pain around the expenditure, and either hide it or go out and spend more and so the vicious cycle begins.

In a previous blog, I discussed the basics of calculating such a return (How do you calculate if an investment is worthwhile?) but here I wish to discuss the intangible return on investment calculation where you assess the doubts and the fears alongside the non-financial expectations of what you hope to achieve from the investment and this is where our 4-minds (a familiar concept I introduced in Successful Business Minds) play a crucial role in helping us to make the best decision.

The steps I advise are as follows:

  • Do the money calculations – see How do you calculate if an investment is worthwhile? for more details.

  • Rationalise the expenditure – Can I pay for it with savings or credit? (Remembering that credit is a loan and must be paid back).

  • Assess the physical abilities – Can I do it physically i.e. Do I have time, is my body & mind capable and do I have (or will get) support?

  • Understand your emotions around the desire for this purchase – why do I really want to buy this? What will I feel through acquiring this?

  • Address the underlying need – What will this give me? How will this contribute to my goals?

  • Address your biggest doubt, for me, this is – Do I trust the person selling me it? Do they have the expertise and knowledge they say they do? Are they practicing what they preach?!

For example, for most businesses in their early days, money is tight and for some, almost non-existent (in which case, I really recommend the insanely cheap 12 Steps to Improve Your Cashflow) thus it is important we address all the action steps above.

For example, early in my business, I found myself with no sales forecasted. Someone I knew was selling a trial for an intensive 6-week online business coaching programme at a very reasonable price, yet I didn’t know where my next sale was coming from so I was caution of spending my savings but then I answered the questions above.

I had the time available, there was weekly support, I trusted the person, the money calculations assured me I would get a return within 3 months, it addressed my underlying need to increase sales and my desire to secure my business growth would be met.

12 Steps to Improve Your Cashflow is a summary of the crucial points I learned on the course and much more. I owe my business success primarily to what I learned in week 1 of that course. Step 3 – be yourself.

To summarise, when weighing up an investment:

  1. Do the money calculations.

  2. Rationalise the expenditure.

  3. Assess the physical support & abilities.

  4. Understand your emotions around the desire for this purchase.

  5. Address the underlying need.

  6. Address your biggest doubt.

If however, like me, trust holds you back, then you may like another blog I wrote Is there a lack of trust behind your fear? and you will love my fourth book! The details and title are still under wraps for now but essentially it will expand on part 3 of Successful Business Minds – the solutions required when we hold a belief that says we are not worthy of success. Stay posted for details, follow me on Facebook or Twitter or get in touch if you would like to know more.

© Helen Monaghan

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