Understanding the Difference Between a Splurge and Investment

No matter how much money we make, there will always be something that we view as “too expensive.” I’ve had entrepreneurs tell me that they want their business to work and need help marketing and selling their services, but wouldn’t pay for a consultant because it’s too expensive.

Learning how to make money is too expensive?

It seems silly, right? But many times we immediately dismiss something we know we need simply because of the price tag that comes with it. Or, we deny ourselves a purchase that could benefit us — even when we have the money — because we feel guilty about splurging. However, some of these “big spends” can actually be a worthwhile investment.

After having dozens of conversations with new entrepreneurs in the last several years, I realized something about the way we think about affordability. It’s not always that an item is too pricey for our budget. I noticed what we may actually mean when we say “it’s too expensive for me” is something more like:

  • “I don’t know how to make enough money to make this investment in myself worth it.”
  • “I don’t trust myself to make that much.”
  • “I don’t know how to make that much.”

Or even more accurately:

  • “There’s an amount of money I can make that would make this amount seem small, but I don’t believe I’m the kind of person capable of making it.”

This doesn’t surprise me given the persistence of “Bag Lady” fears. According to the 2013 Allianz Women, Money and Power Study created by Allianz Life, roughly 50 percent of women who responded to the survey “often” or “sometimes” fear becoming homeless and losing all their money, despite their income levels. This was even the case among 27 percent of the respondents who earn upwards of $200,000 per year.

What’s fascinating about this irrational fear is that in my business, I’ve seen clients who have had less money to begin with spend more on themselves or their personal development, and many have ultimately make the investment back multiple times over. But they weren’t just spending on anything and everything — they were strategic about their purchases.

When they considered a purchase, they asked themselves two questions:

1. Was it a “spend” (a simple item or service that they wanted or needed) or was it an “investment” (a spend with the expectation of a profit or material result)? They were educated before they purchased.

2. What was their earning capability (not their current bank account level) with this item vs. without it?

The women who purchased more tended to ask questions like:

  • “If I purchase X, will I make my investment back?”  
  • “When exactly will X purchase make 25 percent, 50 percent, 100 percent of the investment back?”
  • “Is X purchase designed to improve my business and empower me to know how to make the investment back?” (This one is mostly relevant for business development investments such as coaching, consulting, etc.)

These were women who spent more, but they also earned more because they knew what their purchase would get them.

The truth about the phrase “it’s too expensive” is that it can stem from a lack of education about the purchase and its ability to generate value in one’s life. At the end of the day, our earning potential is up to us. And it comes down to permission and belief in our potential.

What investment do you know you need to “go for”?

Kristen Domingue is a member of the DailyWorth Connect program. Read more about the program here.


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