Anchoring
Why do you spend $x on a certain category each month? The answer probably isn't too deep, and it likely has something to do with the fact that's what you always spend on said category each month. But why? Because that's the way you've always done it.....or at least that's the way you've done it long enough for it to be ultra-normalized.
Now, maybe that's how much you should spend on that category. Maybe it's the perfect number, but probably not. It's probably not even close to the right number. However, we choose that number because we're anchored by the past. We're so accustomed to spending that amount of money each month that we don't even question what it should be. Should it be more? Should it be less? We haven't even considered it!
Once in a while, I'll ask a client who is fully locked into their finances to complete a fun exercise. Instead of basing their next month's budget off what they've done in the past, I'll give them a blank budget with all their utilized categories, and force them to build it from scratch.
You might think they would largely end up in the same place as what they already do every month. You'd be wrong! Most times, this exercise yields completely different results. It's amazing what happens when we remove the anchors from our decisions, and instead, assess each category as it actually lives in our lives. There's a purity in this exercise. It allows us to remove the fog of complacency, the bias toward past realities, and the frictionless non-decision of maintaining the status quo.
I actually think Sarah and I are in need of this exercise soon. Our monthly budgets haven't changed much in the past 18 months, and I don't think that's a good thing. Instead of anchoring ourselves in "normal," we should look at each category through the lens of our current reality. I have a feeling many changes will be made. I encourage you to try this exercise, too!
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