Factor "why" in the management of personal finances
I have been engaged in system management of my own money for more than ten years and have developed my own highly effective system for this, which I enjoy sharing with others. Quite often, I see that people begin to engage in accounting for their own finances, and after a while they give up this activity, explaining that they are not motivated enough. Such cases make me very upset - because I sincerely believe that competent management of personal finances makes a person’s life better, albeit somewhat more boring.
I noticed that most of the books and personal finance management systems from the first page answer the question “how?”, Practically without stopping on the question “why?” Apparently, it is implied that the answer to this question is obvious. However, if the usefulness of financial management were so obvious, as for example, the usefulness of eating, or brushing your teeth, everyone would do it, but the question of motivation would not arise so regularly. In this article, I will analyze financial management using the 5Y (“five why”) technique, or “five why / why”. In this technique, the question “why?” Is consistently set five times, allowing you to go from the surface answer to the deep meaning of this or that action.
The basis of financial management, both personal and corporate, is a high-quality record of income and expenses. “Quality” means that you need to accurately record each of your expenses (with incomes usually easier), fixing at least the amount and category, and for large purchases - the details of the purchase. Since this action is basic in almost any personal finance management system, the 5Y method is applied to it, and we ask, “Why do you need to record all your expenses?” Let's go! For the sake of convenience, the further narrative will be from the first person.
Why am I recording all my expenses? To know how much I spend. Although, let me think ... no, this is the wrong answer. Without this, I know how much I spend - at the end of the month I see how much money I have left, I know how much it was, I also know my income, so you can determine how much I spent in a month with much less effort. So I write down expenses for something else. Perhaps, I don’t just want to know how much I spend, but I want to know what exactly I spend it on. And I also want the result at the end of the month to be predictable. Before I started recording expenses at the end of the month, all the time it turned out that I had no idea where some of the money went. Half of the expenses could be easily remembered, another quarter - with a hitch. The remaining absolutely could not be explained and sank somewhere between the fourth beer in the bar (and who paid for it? I remember, it was not enough, threw off, who had how much ... I put two and two ... And maybe three) and small purchases (ten cups of coffee 200 rubles for two thousand, by the way ...). As a result, at the end of the month, an unpleasant feeling remains: again the money has gone unclear where. In the desire to get rid of this feeling, I began to record expenses. I wanted the financial result of the month to be predictable and explainable .
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Let's go further. Why do we need a predictable and explainable result? I know this so that this result can be controlled. I am an adult, I have financial goals: I want to save for something (apartment, car, cottage, vacation - choose according to taste), plus I want to create a “safety cushion” for 3-4 salaries, so as not to be afraid of a crisis dismissal I want to invest in some business in the end. If I know exactly how much and what I spend on - I can understand how much and where I can save. Already not bad.
So, it was two “why?”, Three left. Why do I need to manage my own financial result? This question is objectively more difficult. For starters, do you really need to manage a financial result? Perhaps yes, although the conclusion is more intuitive than logical. And more specifically, for me personally, “yes.” Because it is easier for me personally, I feel the control over my own life. Once again, we summarize: money is extremely important in life, therefore money management to a large extent contributes to managing life in general. By the way, psychologists have proven that, up to a certain level of income, the level of happiness correlates with the level of income, so managing money in a certain sense is also managing your own happiness. If there is a mess in the money, or there is not enough of it - we worry, we worry, we are unhappy. If the money is under control, we are calm and more happy about it. I, of course, would not equate the concepts of “money” and “happiness,” such a view is obviously too narrow, but financial calmness is definitely a step on the path to happiness.
Summing up the last reasoning, we covered two whole “why?”. Why do you need to manage your own financial result? To find financial calm? And calm, in turn, needs to be more happy. The answer to the question of why you need to be happier, I will probably leave it to you - I suppose it is for everyone.
Restore the chain: record expenses => have an explainable and predictable financial result => be able to manage this result => gain peace of mind => move forward on the path to happiness.
Very good final result, agree? Recording costs, it turned out, is not just a useful action, it is one of the tools on the path to peace and happiness. Do not have a desire to start recording?
From this, by the way, there follows another funny conclusion: there are people who are able to not worry about money - I don’t know how they do it, this is a natural anomaly. For them, achieving peace through money management is not required; peace in this area already exists . Apparently, they and financial management is not needed.
Continued: Motives and goals in personal finance management
I noticed that most of the books and personal finance management systems from the first page answer the question “how?”, Practically without stopping on the question “why?” Apparently, it is implied that the answer to this question is obvious. However, if the usefulness of financial management were so obvious, as for example, the usefulness of eating, or brushing your teeth, everyone would do it, but the question of motivation would not arise so regularly. In this article, I will analyze financial management using the 5Y (“five why”) technique, or “five why / why”. In this technique, the question “why?” Is consistently set five times, allowing you to go from the surface answer to the deep meaning of this or that action.
The basis of financial management, both personal and corporate, is a high-quality record of income and expenses. “Quality” means that you need to accurately record each of your expenses (with incomes usually easier), fixing at least the amount and category, and for large purchases - the details of the purchase. Since this action is basic in almost any personal finance management system, the 5Y method is applied to it, and we ask, “Why do you need to record all your expenses?” Let's go! For the sake of convenience, the further narrative will be from the first person.
Why am I recording all my expenses? To know how much I spend. Although, let me think ... no, this is the wrong answer. Without this, I know how much I spend - at the end of the month I see how much money I have left, I know how much it was, I also know my income, so you can determine how much I spent in a month with much less effort. So I write down expenses for something else. Perhaps, I don’t just want to know how much I spend, but I want to know what exactly I spend it on. And I also want the result at the end of the month to be predictable. Before I started recording expenses at the end of the month, all the time it turned out that I had no idea where some of the money went. Half of the expenses could be easily remembered, another quarter - with a hitch. The remaining absolutely could not be explained and sank somewhere between the fourth beer in the bar (and who paid for it? I remember, it was not enough, threw off, who had how much ... I put two and two ... And maybe three) and small purchases (ten cups of coffee 200 rubles for two thousand, by the way ...). As a result, at the end of the month, an unpleasant feeling remains: again the money has gone unclear where. In the desire to get rid of this feeling, I began to record expenses. I wanted the financial result of the month to be predictable and explainable .
')
Let's go further. Why do we need a predictable and explainable result? I know this so that this result can be controlled. I am an adult, I have financial goals: I want to save for something (apartment, car, cottage, vacation - choose according to taste), plus I want to create a “safety cushion” for 3-4 salaries, so as not to be afraid of a crisis dismissal I want to invest in some business in the end. If I know exactly how much and what I spend on - I can understand how much and where I can save. Already not bad.
So, it was two “why?”, Three left. Why do I need to manage my own financial result? This question is objectively more difficult. For starters, do you really need to manage a financial result? Perhaps yes, although the conclusion is more intuitive than logical. And more specifically, for me personally, “yes.” Because it is easier for me personally, I feel the control over my own life. Once again, we summarize: money is extremely important in life, therefore money management to a large extent contributes to managing life in general. By the way, psychologists have proven that, up to a certain level of income, the level of happiness correlates with the level of income, so managing money in a certain sense is also managing your own happiness. If there is a mess in the money, or there is not enough of it - we worry, we worry, we are unhappy. If the money is under control, we are calm and more happy about it. I, of course, would not equate the concepts of “money” and “happiness,” such a view is obviously too narrow, but financial calmness is definitely a step on the path to happiness.
Summing up the last reasoning, we covered two whole “why?”. Why do you need to manage your own financial result? To find financial calm? And calm, in turn, needs to be more happy. The answer to the question of why you need to be happier, I will probably leave it to you - I suppose it is for everyone.
Restore the chain: record expenses => have an explainable and predictable financial result => be able to manage this result => gain peace of mind => move forward on the path to happiness.
Very good final result, agree? Recording costs, it turned out, is not just a useful action, it is one of the tools on the path to peace and happiness. Do not have a desire to start recording?
From this, by the way, there follows another funny conclusion: there are people who are able to not worry about money - I don’t know how they do it, this is a natural anomaly. For them, achieving peace through money management is not required; peace in this area already exists . Apparently, they and financial management is not needed.
Continued: Motives and goals in personal finance management
Source: https://habr.com/ru/post/292082/
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