I have pushed simplicity quite a bit this year. And I will continue to do so, because I think in most cases adding complexity does not add value.
We think that if it involves money it should be complicated, and that simply isn’t true.
In most cases, I push for fewer accounts, fewer categories, fewer moving parts but there is a place for granularity.
If you have a category that represents many different sub-categories all vying for your dollars, you can end up with a lot of spending that is not representative of your priorities. You might find that by breaking up a catch-all category into more specific categories could give you greater visibility, and thus, more control.
For instance, eating out. This is a big one for a lot of people. If eating out represents your date nights, a severe coffee habit, lunches at work and family dinners, you will lose sight of how much priority you are giving to each activity, which are not equally important to you. By breaking up this big eating out black box into several categories and sizing them appropriately, you can be more intentional about pointing that spending toward your values. Lunch at work? Not important. Date nights? Very important. So size your categories and spend your money accordingly.
Granularity isn’t always appropriate. It isn’t necessary to know how much you spent on tooth paste, but granularity, in support of better aligning your spending to your values, is a good thing.
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Until next time…