Money Talks

Getting Real About Your Finances: Understanding What You Need vs. What You Want

Today we're diving into a topic that can often feel a little, well, tricky… yep, you guessed it - money. But don’t worry, because I’m here to break it down in a way that feels simple, manageable, and dare I say, fun? ✨

Right, let’s talk about finances. Whether you're in your 30s or 40s, running a business, and not quite hitting that dream income yet, or you're doing well but want more clarity around your money, this episode is for you. Today, we're going to get super real about understanding your need amount vs your want amount, and why chasing those six and seven-figure businesses you see on Instagram isn’t always what it seems. Plus, we’ll dive into how to better manage your business finances and give you a few tools to make the whole process easier.

The Difference Between Your Need and Want Amount

Let’s start with something super important: understanding the difference between your need amount and your want amount. These two numbers are the foundation of financial clarity in both your personal life and business.

So, what is your need amount? It’s the bare minimum. This is the money you need to cover all of your essential expenses - your mortgage or rent, bills, groceries, your kids' clubs, and of course, your business expenses (wages, overheads, subscriptions, etc.). Knowing this number is a game-changer.

I remember about six years ago, my husband and I realised we had no idea where all our money was going each month. I sat down with our bank statements and highlighted every single expense - everything from our weekly grocery shop to those quick trips to grab a pint of milk. The shocker? We were spending double what we thought on food! 😱 It was such an eye-opener and instantly made us more conscious about how we were spending.

Once you’ve worked out your need amount, it feels like a weight has been lifted. You’re no longer guessing how much you need to earn each month to keep things ticking over - you know the number. And that clarity is empowering.

Then comes the fun part: your want amount. This is where you get to dream a little. What would you love to have beyond your essential needs? This might be more holidays, treating yourself and your family, investing in your business, or hiring more team members. The key here is to make sure your want amount aligns with your personal dreams and not just what society or social media says you should want.

Take a moment to sit down this week and get really honest with yourself. Write down your need and want amounts and gain clarity on your financial goals. When you do this, you’ll stop chasing other people’s financial dreams and start focusing on what truly matters to you. 💡

Let’s Get Real: Six and Seven Figure Business Goals

We’ve all seen the posts on Instagram about six and seven-figure businesses, right? And while that might sound like the ultimate goal, let me tell you something - it’s not always what it seems. Sure, having a six or seven-figure business sounds incredible, but that number is often just one part of the story.

Here’s where the real talk comes in: those flashy revenue numbers you see online? They’re often just revenue - not profit. What matters more than the sales you’re bringing in is how much you’re keeping at the end of the month, after all the business expenses are paid. That’s your profit margin.

You could have a business pulling in £500,000 a year in sales, but if you’re spending £495,000 to keep it running, what’s left in your pocket? Not much! I can’t stress this enough - focus on profitable growth, not just revenue growth.

One thing I love doing when I see those big claims online is having a cheeky look at Companies House. 😉 It’s amazing how often those shouting the loudest about their six or seven-figure businesses have relatively small profits. So, don’t get caught up in the noise. Success looks different for everyone, and it’s so important to make sure you’re focusing on your version of success, not someone else’s.

Why Money Isn’t Real (Sort of)

This next bit is going to blow your mind - did you know that only about 8% of the world’s money is in physical cash? 😲 The rest? It’s all just numbers on a screen. Crazy, right? Once you understand this, it can really change the way you think about money.

Money isn’t the stacks of cash sitting in a vault somewhere - it’s just a digital representation of value. And this understanding can help break down those money blocks we’ve all got (more on those in a minute). When you start seeing money as more of an energy exchange that flows in and out of your life, it removes some of the fear and allows you to open up to receiving more.

Understanding Your Profit Margins and Business Finances

Okay, let’s get practical. Understanding your business finances is key to long-term success. And I get it - numbers can feel overwhelming. But once you understand your profit margins and where your money is going, you’ll feel so much more empowered.

Your profit margin is the percentage of revenue that’s left after all your business expenses are paid. So, if you make a sale of £100, but it costs you £50 to deliver that product or service, your profit margin is 50%. The higher the profit margin, the healthier your business.

And here’s where I give a big shoutout to one of my favourite accounting tools, Xero. 💻 If you’re not already using it, seriously, give it a try. It gives you a real-time view of your cash flow, profit margins, and expenses, making tracking your finances so much easier.

Tackle Your Money Blocks

Lastly, let’s talk about money blocks. We all have them - those limiting beliefs about money that can hold us back. Whether it’s thinking you don’t deserve to make a lot of money or that money is hard to come by, these thoughts often stem from childhood and can majorly impact how we approach business.

Take a moment to reflect on your own beliefs about money. What stories have you been telling yourself? And what steps can you take to start shifting those limiting beliefs?

Your Money Story is Yours to Write

At the end of the day, your money story is yours to write. Whether that means running a six-figure business or just earning enough to live the life you truly want, the key is to focus on what feels right for you. You don’t have to buy into the hype or chase someone else’s goals.

Take control of your finances, track your profit margins, and set meaningful money goals that align with your dreams and lifestyle. You’ve got this. 💪

Until next time, take care, stay confident, and keep making that magic happen! ✨

Listen to the full episode here:

Apple: https://podcasts.apple.com/gb/podcast/025-making-sense-of-money/id1752713529?i=1000674110822

Spotify: https://open.spotify.com/episode/0hmFaqJnlvjQjmF8Qgz7Wq?si=8gR2V_SPTWavQt6UKm-_CQ