Need vs Want

Need vs Want

Why is it that some people who are successfully responsible for very large budgets and profit targets for their business or employer are sometimes absolutely hopeless with their own personal finances?

 After years of coaching clients in this predicament, I have found that the main reason is that in business mode, people find it easy to distinguish between a need and a want. In business mode, people aim for a profit target. In business mode, expenses need to be justified against budgets set out in a business plan.

 If this sounds familiar to you, try the following.

 1. Imagine your family is a business, “Your Name Inc”. The total family after tax income coming in is the business’ turnover.

 2. Firstly, set a realistic ‘profit’ figure to aim for – say 10% of your income.

 3. Then, list all of your fixed overheads – whatever you need to spend to live. (Electricity, loan repayments, groceries, phone bills, car, education, insurance, superannuation etc). 

 4. Next, list whatever major things you are planning to buy in the future – next years holiday, a new car or house, kids education, early retirement etc. How much will they cost? When is the money needed by? How much do you need to put away per pay to have that amount of money available when it’s needed?

 5. Is there any money left after subtracting from your income your profit target, fixed overheads, and future plans? If so, this is available to spend on whatever you like – luxuries or extra profit.

 Congratulations you now have a basic Personal Business Plan, complete with a finance plan, profit targets, and future strategy plan. (You have a financial plan, you are paying yourself first, you have a budget, and you are planning for the future)

 Once this is set-up, monitor and fine-tune your plan to make it realistic and workable. Keep records.

 Importantly, when a non-budgeted expense arises, measure it against your business plan. Is it a want or a need? Can you afford it and still achieve your profit target, pay your fixed overheads, and achieve your future goals?

 If not, can you increase your income to cover it? What expenses can be cut?

 If you can afford it – enjoy! Spend the money, buy the item – guilt free because you have a plan, and it fits into your plan.


Spring is working hard to peek through this long spell of below average temperature and above average rainfall. Gardens are looking great (ignoring the weeds!), and the creeks are flowing in the Flinders Ranges – might go for a drive on the weekend for a look.

How is your garden looking? Do tell.




 This article is general in nature only and does not constitute or convey specific or professional advice. Formal advice tailored to your specific circumstances should be sought before acting in any of the areas discussed.