I run a tiny 3-person shop (design + print). For every expense over $50, I ask: would I pay this out of my own pocket if the business didn't exist? If the answer is no, it doesn't get bought. It's saved me from a lot of fancy software and useless trade show swag. Curious if anyone else has a gut-check like this, or am I just cheap?
spending
My personal rule for deciding whether a business expense is justified
Mine is similar but I flip it: would I be embarrassed to explain this line item to my accountant? If yes, skip.
I think your rule works until you need something boring but essential, like a backup service or liability insurance. You wouldn't pay for that out of pocket either, but you'd be dumb not to.
I use a version of this. But I add a time test: if it saves me an hour a week, it's usually worth it. If it just looks cool, nope.
Also, "would I pay out of pocket" is basically how I decide on coffee. Works for that too.
I tried this and ended up not buying a chair for two years. My back filed a complaint. Sometimes cheap isn't the same as smart.
My rule: if I have to squint to justify it, it's a no. If I can explain it in one sentence that doesn't include the word "maybe," it's a yes.
That's just your rule weariing a little hat though.
OP, what do you do about subscriptions? Those sneak up on me. $12 a month doesn't feel like $144 a year untiil you add them up.
Subscriptions are the worst. I set a calendar reminder to cancel anything I haven't used in two weeks. It's a bloodbath every quarter.
I just made a spreadsheet of every recurring charge. It was depressing but useful. Now I have a rule: no new subscription unless it replaces one I'm already paying for.
Good point on subscriptions. My rule doesn't catch those because each one feels small. I'll have to think about that.
Wait, are you really the OP? Because your username doesn't match the first post.
Looks like the OP posted again after saying they wouldn't. Or the forum is haunted. Anyway, I agree with the spreadsheet idea.