Finding the balance - Spending vs. Saving

I equate managing my money to managing a business - "money in" needs to exceed "money out" in order to be profitable. If only it were that easy.

What are the key factors that impact the success of a business?

Customers - No business is successful without selling a product or service to the customer. Customers generate income. Good customer service produces happy and better paying customers, and thus more income. My customer, the source of my income, is my employer. The happier my employer is with the services I provide, the better and more reliable my income stream becomes.

Employees - Quality employees are crucial to the success of a business. Depending on the nature of the business, employees produce a product, provide a service, or perform any of a number of ancillary tasks necessary for others within the company to produce a product or provide a service. I am the only employee on the payroll of my personal finances. Employee satisfaction plays an enormous role in quality of work and productivity. In other words, the happier I am, the more productive I can be in providing services to my employer and performing all of the ancillary tasks necessary to provide those services.

Taking the essentials of business management and applying them to my personal financial management:

Employee Satisfaction: Even though it reduces the profit margin, it is necessary to direct some expense to projects and programs geared specifically at improving employee satisfaction. I need to spend some money on myself, through "luxury" expenses, entertainment, and personal and professional development in order to cultivate employee satisfaction and improve productivity.

Invest in the future: Any good business manager knows that a stagnant business will flounder. The business needs to keep pace with a changing market, and some funds need to be invested in new product lines, research and development, marketing, and such - funds with no explicit payoff, but statistically will improve the performance of the business down the road. Some money needs to be invested in my future, through education and training, savings, and retirement planning.

Why am I writing all of this?

I have always struggled to find the right balance in my expenses. Through college and after graduation, I spent too much to develop "employee satisfaction" without a sufficient increase in productivity to cover the expense. The resulting debt continues to haunt me years later. I started to swing to the other end of the spectrum, ignoring "employee satisfaction" and instead focusing on debt repayment and savings. The resulting drop in employee satisfaction quickly led to burnout at work. If left unchecked, that burnout could threaten my productivity enough to impact income.

With every review of my budget, I reconsider the rates for debt reduction and savings and the amounts available for entertainment and "employee satisfaction" projects - new uniforms (clothing), work environment (household purchases), and benefit packages (vacations and such). With every review I get a little closer to a balanced approach to debt repayment and savings with enough "all about me" expenses to break up the month.

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