3 Money Management Tips to keep you away from the next Shiny Object Syndrome, Sunk Costs Fallacy and Penny Pinching
Knowing how to manage money and handle it isn’t something that is taught in the early ages of life. Instead we are left to try to figure it out along the way.
No wonder poor money management has been the cause of many business failures as the same mindset issues and bad habits are identical to those inherent to personal finances.
In the time we are living now, we have authors writing about the subject of money more openly such as Connie Ragen Green’s recent book titled Kids and Money.
In this most recent book, Connie draws upon her decades of experience with teaching responsibility and values within her own family, in the classroom, and with small groups in a private setting. She believes that it is never too early to start teaching kids about money and that it is our duty to pass down what we know and believe to future generations.
~ How your concept of money changes throughout your lifetime
~ Why shifting your beliefs around money is a worthwhile goal
~ How to determine your child’s “financial personality”
~ Why giving kids an allowance may set them up for future disappointment
~ When to begin fostering independence in children with a five part plan
~ How teaching generational values gives children a foundation for success
~ Why alleviating financial stress in children makes a difference
THREE (3) AREAS WHERE GOOD DECISIONS CAN AVOID YOUR BUSINESS GOING BROKE
1. The Next Shiny Object Syndrome
What makes it that you cannot resist another offer?
– Your friends and colleagues are jumping on board
– The fear of missing out (FMO)
– You feel a strong pull for a new shiny business model
– New tools, training, coaching which seems like the missing link to your prosperity.
To resist the impulsive desire to acquire the offer, breathe in, take a pause and ask yourself this question:
• Can I achieve a positive return on investment for this product/offer that will pay back at least the purchase price?
If the answer is ‘NO’, don’t buy it!
• A new business model?
Pass it to test by creating an idea list and a basic outline on a word document or a piece of paper. Then, move away from it. Go back to what you were doing prior to being exposed and attracted to the offer.
Rest assured, the idea is there, black on white, and will not vanish. Many times, this simple process avoid having the list/outline join the ranks of so many half-finished business plans piling up on your desk from programs bought online.
2. Falling into the White Elephant pattern
Do you recall saying to yourself: “Hum…I should unsubscribe from this membership because I am not using it and don’t have time to pursue and profit from the value it offers. Geez…but I can’t give it up! I’m still paying the launch price and now it’s much more expensive!”
Then you’ve fallen into the White Elephant pattern or sunk costs fallacy.
This mistake is famous among all entrepreneurs, especially startups, as new business owners overspend, buying more equipment and tools than the business can sustain, but we all fall victim to it from time to time.
We are great at pouring money and time into something that do not produce results, only because we already spent so much! It’s what encourages us to continue to pay for tools and resources we are not using.
When it comes to overspending, rethink your habits.
I’m pretty sure that if you take a few minutes and examine your current business expenses you’ll discover monthly recurring expenses for programs and memberships that you are not using.
If that is the case, do the following: make a plan to put them to work for you, or cancel them. Stop the bleeding…
By the way, for those asking, a white elephant symbolize a gift that has no usefulness to the recipient, especially when any utility in the item is overshadowed by the cost of its upkeep.
The expression comes from the story that the kings of Siam gave such animals as a gift to courtiers they disliked, in order to ruin the recipient by the great expense incurred in maintaining the animal.
3. Too Much Penny Pinching
Spending too little is just as bad for business than overspending.
If you find yourself on the lookout for free and low-cost tools or working 16-hour days because you “can’t afford to outsource,” you’re not doing your business any favors as you are reinforcing a scarcity mindset that will continue to plague you for years if you let it.
The best way to go about this is to spend money strategically. Buy what you need, when you need it. Invest in top-quality products and programs rather than settling for the low-ticket, half-baked plans. Quality services and software last longer, work better and will pay for themselves.
Don’t sacrifice quality for cheapness when it comes to significant parts of your business.
No matter what you’re spending money on, if it’s significant to your business, quality should be the priority. That doesn’t mean that you need to opt for the most expensive options, but choosing cheap, low-quality materials can negatively impact your operations. It may mean that components are not working the way they should or that items don’t last as long as they should.
There are plenty of challenges that come along with business ownership, and managing your finances is definitely one of them. That makes it easy to fall victim to the common money pitfalls outlined above.
Fortunately, awareness is the first step to effectively overseeing your business finances. Keep an eye out for these frequent traps, and you’re far less likely to become another statistic.
DISCOVER MORE WAYS TO KEEP YOUR COMPANY GROWTH FINANCIALLY HEALTHY WITH THESE TOP RATED BOOKS
If you’re tired of the lies and sick of the false promises, take a look at this—it’s the simplest, most straightforward game plan for completely making over your money habits.
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