Harford gave an excellent talk about what he calls the God Complex, which essentially describes people who like to understand, find reason, and strategize any situation. To them, trial and error is too risky. Does this sound like you? Do detailed plans of action based upon careful study put you at ease? That is your downfall, according to Harford.
Because we’re so obsessed with money management here at The Grove, I immediately started to think how this applies to budgeting.
There is so much advice on budgeting, but which method is best for you? Everyone has their two cents (even us, if you read our blog header!) and it might seem overwhelming to have to select the BEST approach for your financial situation. It’s tedious to breakdown your spending behavior and monthly costs, and how should you allocate your income for all of these different areas? Should you use a spreadsheet, or an envelope method? You should pay yourself first, or should you stick your spare change in a jar at the end of the day?
If we take Harford’s advice, we should stop fretting and just try a bunch of stuff and see what sticks. Don’t agonize about the things you’re sure about when it comes to your finances. Embrace your desire to make an effort, and start with something. Try the envelope method. If you hate it, start crafting a detailed spreadsheet. Coming up with a personalized budget that works best for your circumstances is a process of trial and error, and I think Harford would agree that our financial lives will only evolve through trial and error.
Go forth and experiment, Mango-ers– but be smart, of course. Taking drastic measures is not the same as a thoughtful trial and error process. And please comment if you have any stories about your trial and error budgeting experiences. We would love to hear them.
Source: Planet Money
Image: hellogreenstar under Creative Commons license