Ignorance Is Not, In Fact, Bliss
In working with hundreds of families over the years, one thing is consistently true: We humans have a very poor ability to mentally track how much we spend on x category each month. Example: I recently asked a family how much they spend on dining out each month: "Probably $200, $300 tops."
"Well, we're about to find out," I responded. "Out of curiosity, why do you say $200-$300?"
"Because we kinda track it already. I just know what we spend."
"Kinda tracking is the same as not tracking at all," I said.
Fast forward to the end of the following month, and they had formally tracked all their spending: $913. More than triple their top-end estimate!
"That can't be!" the husband exclaimed. "I know what we spend, and we don't spend $900!"
He's not dumb. He's not a liar. He's not bad at math. He's not trying to pull my leg. This is how we humans mentally accrue math that spans several smaller numbers. We grossly miscalculate the cumulative impact of a string of decisions.
Ignorance isn't bliss. A rough understanding is the same as no understanding. We don't need to be number police and obsess about everything in our lives, but if we want to get better in a certain area, we need to educate ourselves. This is always priority #1 for my coaching clients. There are three steps to getting right with money:
Gain awareness
Gain control
Gain traction
We can't gain control or gain traction until we've first gained awareness. Here's the good news: Gaining awareness doesn't cost money, require special skills, or necessitate a large time commitment. All it requires of us is care and intentionality.
Here's my encouragement. If you're not fully locked into a budget yet, pick a category you want to improve on. For the next calendar month, log every dollar you spend on that category. Use the Notes app on your phone if you'd like. You don't even need to log it to the penny; round to the nearest dollar. Date: Amount. Date: Amount. Date: Amount.
If you commit to the practice for even just one month, you'll gain insights about yourself that will arm you to succeed next month, the month after, and so on. Simple, effective, game-changing. Note: this isn't about spending less; it's about spending better. After we assess what we're actually spending, we can determine if that's a good amount in the context of our lives. Maybe we should spend more! Maybe knowing how much we're spending can help us make better and healthier decisions in the other categories. Maybe we want to put some guardrails in place. So many opportunities for improvement, all stemming from becoming aware.
This isn't supposed to be some magical, earth-shattering idea. Rather, a simple idea that's easy to execute and will provide far more value than it will cost you. Happy tracking!
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