Financial thermostats

The positive economist, Susan Hayes, introduced me to this concept at a talk for the Ireland Fund of Great Britain recently.

Its simple, and I’ve seen it evidenced in my life a fair few times since!

The idea is that you have a level, call it room temperature, at which you feel you have ‘enough’ money. The minute your thermostat drops below, you save and are thrifty to get it back to room temp. The minute it goes over this level, you spend back down!

Being self employed, this is potentially even more dangerous. Some months, the money floods in and you celebrate – whether your celebrating is in restaurant / pub / clothing form / holiday form! Then the next month arrives, and you really wish you hadn’t.

She suggested raising your internal thermostat level, slowly, so that you will just have more money. I think that’s great, but I’m going a step behind that as I think it assumes you know exactly what you spend a month, which you may not.

I think having a figure in mind that’s your safety is critical. Then managing your accounts so that you always know what you have is vital. Paying yourself a salary as a self employed person is essential.

Another thing I realise the other day is – its not actually about how much money you EARN if you are trying to finish the year in debit. It’s about how much you spend!

How much money do you credibly need to have so that you can stop worrying about it?

So ignore the climate hype – set your financial thermometer higher, today!

Working your hours not all hours

As a self-employed person, I constantly find myself worrying that I don’t do as much work as people in offices. As I don’t have a commute (joy!) the day stretches in front of me – 9 blissful hours, some calls, some lunch….but how do I know I’ve done enough? When can I feel satisfied?

Then this morning my wonderful mentor, Sophie Field at Thinking Time, pointed out that we are so used to time boundaries, instilled from school and then work, that changing that mentality is really hard. However as self-employed people, we have probably made a choice that we want to work differently – take control of our time, have space to do things differently. But the 9-5 world is still the majority so we are constantly measuring ourselves against that.

So what are we to do? Well, this is what I’m going to try. 6 hours a day, pure unadulterated work. The rest, I can play with. Read in. Enjoy. Realistically, in an 8 hour office day there would be an hour for lunch, an hour or so of banter, tea – some meetings. 6 hours is probably a fairly good summary if what office workers achieve. And when you know how to prioritise time, work most effectively, which I do (see previous blogs!) then I can do a lot in 6 hours!

And 30 hours a week sounds pretty good to me!