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Yes and no. Accounting helps you decide what to optimize. Spending a lot on Uber? Maybe you can get a bike instead. Spending too much on groceries? Maybe you do

by Swizec 10y ago

Yes and no. Accounting helps you decide what to optimize. Spending a lot on Uber? Maybe you can get a bike instead. Spending too much on groceries? Maybe you don't need to buy too much food every time. Things like that. Also this: http://www.esquire.com/lifestyle/money/a44086/four-men-four-numbers/ http://www.esquire.com/lifestyle/money/a44086/four-men-four-... Note that the higher the income, the tighter control of their finances the person has. At least in that story. But fundamentally you have to do both: know how you spend and make more

pbreit 10y ago
Those are exactly the types of things OP (rightly) thinks are a waste of time.
vinceguidry 10y ago
When I did do personal accounting, it didn't do diddly for me in that regard. Is accounting going to teach you how to negotiate a raise? Is accounting going to show you the best companies to apply to or how to represent yourself in an interview? Is accounting going to win you a lover or turn that lover into a significant other? No. Emotions are the key to all of the previous things, either mastering them or expressing them. That's where one should focus their efforts.
- Swizec 10y ago
  Maybe I'm thinking about it differently then. Accounting has been absolutely instrumental on my path from $20k/year to 6 figures (in 4 years). Without it, I'd piss all my money away because I have no idea how to handle these kinds of sums mentally and emotionally. Accounting keeps me in check so I can use my money in ways that make more money instead of fritting it away.
  - vinceguidry 10y ago
    My current understanding is that my lifestyle costs a certain amount of money, these days around $50-60 per day. Rounded up that's $2K a month. My paycheck rounds out to $6K a month. So I have $4K surplus to play with. In my estimation, cutting that $50-60 a day that I spend on eating out and such isn't really worth it. Dropping my $300 a month car payment for a new car isn't worth it. What is worth cutting out is the hundreds I can sometimes blow on things like unnecessary clothes or electronics purchases. These things add nothing to my life, I usually use them once and forget them. Spending freely on eating out and buying drinks for my friends and pretty girls at the bar brings way more value to my life. And, paradoxically, it can be a more stable expense. Expensive restaurants just aren't as good as my favorite ethnic spots. My local haunt has cheap drinks and a more fun clientele than the high-falutin spots downtown. There's a point of diminishing returns on everything you can possibly spend money on. Most of us blow way past that point without even thinking. But if you keep this point in mind, then you can get phenomenal bang-for-your-buck in places that nobody could ever think would be affordable. I took two two-month long trips to Colombia staying in hostels for not a whole lot. Budgeting doesn't teach you this mindset.
    - Swizec 10y ago
      I suck at budgeting. But accounting taught me this mindset. It helped me realize that I don't value some things as much as they cost. So I don't do them. ¯\_(ツ)_/¯
    - plaguuuuuu 10y ago
      >My current understanding is that my lifestyle costs a certain amount of money, these days around $50-60 per day. Rounded up that's $2K a month. My paycheck rounds out to $6K a month. So I have $4K surplus to play with. First you say you don't believe in accounting, then a few posts down you decide to suddenly do some accounting. I'm confused.
      - vinceguidry 10y ago
        I built an accounting app for personal use. My perspective draws from that experience. Of course I can do some rudimentary financial calculations and budgeting if I put my mind to it. The point is, I just don't. The figures I gave are the natural set points, not budget targets. If I just let go and do whatever, that's what I spend. If I went from $100K to $300K, my personal spending would go up, but not dramatically. I've already found points of diminishing returns for most of the things in my life that I've found that's worth spending money on. I'm sure I could find ways to spend it, but the sort of mindless spending on stupid crap that most people do, I seem to be immune to it.
    - bloat 10y ago
      That's good that you have that surplus. I think that's the real reason you can be as relaxed as you are about planning your finances. I have a much smaller surplus, and of course you're welcome to argue that I should be behaving differently in order to increase it. But really, spending an hour a week doing my finances (I use YNAB) does not affect my earning potential in any significant way. I don't think it makes any sense to argue that I should stop doing it, and spend that time trying to get a better job. I can do both! That time spent gives me the reassurance I need that I can carry on paying my mortgage, feeding and clothing my family and taking them on holiday, and also that I can very probably meet any unexpected expenses that arise. This is a great feeling, well worth an hour a week of my time.
beefield 10y ago
Personally, I find everything related to personal finances among the least interesting and most repulsive things to waste my precious spare time. My solution? My regular expenses are significantly smaller than my income, which lets me basically ignore my personal finances. (This does not mean I do not consider whether a gadget is worth the price. I just typically do not need to think whether I can afford it or not) How do I do that? By making relevant choices in the biggest expense classes, i.e. housing and car. My accommodation and car choices are _well_ below my typical peer standards. Easy? Depends on your character. Personally I enjoy the freedom and control I have on my own life much more than I dislike the laughs[1] I get from my old friends when I pop up into meeting them with a crappy old bicycle. [1] Obviously this is much easier when both I and my friends know that I could "afford"[2] to buy a similar car than they, I just have chosen not to. [2]In the normal sense of being able to finance it. My personal definition for affording something is that I do not have to care financially whether the purchase gets stolen the following day or not
- Swizec 10y ago
  This is accounting and personal finance. Unless I am completely mistaken about what either of those terms mean. Your approach follows amdahl's law by the way. Optimize for big wins instead of doing micro optimizations. Accounting is how you know which are which.
  - infinite8s 10y ago
    That's an interesting way of thinking about it. Accounting is the programming equivalent to profiling (money flows in this case instead of time/memory flows).
- edent 10y ago
  > My regular expenses are significantly smaller than my income How do you know this? By what method do you account for your spending? > when I pop up into meeting them with a crappy old bicycle. How much do you spend on repairing your bike (either time or cash)? Does that work out as being more cost effective than buying a new bike / taking the bus / etc? If only there were a simple way to keep track of spending to see if it really were cost effective...

by Swizec 10y ago

pbreit 10y ago

Those are exactly the types of things OP (rightly) thinks are a waste of time.

vinceguidry 10y ago

When I did do personal accounting, it didn't do diddly for me in that regard. Is accounting going to teach you how to negotiate a raise? Is accounting going to show you the best companies to apply to or how to represent yourself in an interview? Is accounting going to win you a lover or turn that lover into a significant other? No. Emotions are the key to all of the previous things, either mastering them or expressing them. That's where one should focus their efforts.

Swizec 10y ago
Maybe I'm thinking about it differently then. Accounting has been absolutely instrumental on my path from $20k/year to 6 figures (in 4 years). Without it, I'd piss all my money away because I have no idea how to handle these kinds of sums mentally and emotionally. Accounting keeps me in check so I can use my money in ways that make more money instead of fritting it away.
- vinceguidry 10y ago
  My current understanding is that my lifestyle costs a certain amount of money, these days around $50-60 per day. Rounded up that's $2K a month. My paycheck rounds out to $6K a month. So I have $4K surplus to play with. In my estimation, cutting that $50-60 a day that I spend on eating out and such isn't really worth it. Dropping my $300 a month car payment for a new car isn't worth it. What is worth cutting out is the hundreds I can sometimes blow on things like unnecessary clothes or electronics purchases. These things add nothing to my life, I usually use them once and forget them. Spending freely on eating out and buying drinks for my friends and pretty girls at the bar brings way more value to my life. And, paradoxically, it can be a more stable expense. Expensive restaurants just aren't as good as my favorite ethnic spots. My local haunt has cheap drinks and a more fun clientele than the high-falutin spots downtown. There's a point of diminishing returns on everything you can possibly spend money on. Most of us blow way past that point without even thinking. But if you keep this point in mind, then you can get phenomenal bang-for-your-buck in places that nobody could ever think would be affordable. I took two two-month long trips to Colombia staying in hostels for not a whole lot. Budgeting doesn't teach you this mindset.
  - Swizec 10y ago
    I suck at budgeting. But accounting taught me this mindset. It helped me realize that I don't value some things as much as they cost. So I don't do them. ¯\_(ツ)_/¯
  - plaguuuuuu 10y ago
    >My current understanding is that my lifestyle costs a certain amount of money, these days around $50-60 per day. Rounded up that's $2K a month. My paycheck rounds out to $6K a month. So I have $4K surplus to play with. First you say you don't believe in accounting, then a few posts down you decide to suddenly do some accounting. I'm confused.
    - vinceguidry 10y ago
      I built an accounting app for personal use. My perspective draws from that experience. Of course I can do some rudimentary financial calculations and budgeting if I put my mind to it. The point is, I just don't. The figures I gave are the natural set points, not budget targets. If I just let go and do whatever, that's what I spend. If I went from $100K to $300K, my personal spending would go up, but not dramatically. I've already found points of diminishing returns for most of the things in my life that I've found that's worth spending money on. I'm sure I could find ways to spend it, but the sort of mindless spending on stupid crap that most people do, I seem to be immune to it.
  - bloat 10y ago
    That's good that you have that surplus. I think that's the real reason you can be as relaxed as you are about planning your finances. I have a much smaller surplus, and of course you're welcome to argue that I should be behaving differently in order to increase it. But really, spending an hour a week doing my finances (I use YNAB) does not affect my earning potential in any significant way. I don't think it makes any sense to argue that I should stop doing it, and spend that time trying to get a better job. I can do both! That time spent gives me the reassurance I need that I can carry on paying my mortgage, feeding and clothing my family and taking them on holiday, and also that I can very probably meet any unexpected expenses that arise. This is a great feeling, well worth an hour a week of my time.

beefield 10y ago

Personally, I find everything related to personal finances among the least interesting and most repulsive things to waste my precious spare time. My solution? My regular expenses are significantly smaller than my income, which lets me basically ignore my personal finances. (This does not mean I do not consider whether a gadget is worth the price. I just typically do not need to think whether I can afford it or not) How do I do that? By making relevant choices in the biggest expense classes, i.e. housing and car. My accommodation and car choices are _well_ below my typical peer standards. Easy? Depends on your character. Personally I enjoy the freedom and control I have on my own life much more than I dislike the laughs[1] I get from my old friends when I pop up into meeting them with a crappy old bicycle. [1] Obviously this is much easier when both I and my friends know that I could "afford"[2] to buy a similar car than they, I just have chosen not to. [2]In the normal sense of being able to finance it. My personal definition for affording something is that I do not have to care financially whether the purchase gets stolen the following day or not

Swizec 10y ago
This is accounting and personal finance. Unless I am completely mistaken about what either of those terms mean. Your approach follows amdahl's law by the way. Optimize for big wins instead of doing micro optimizations. Accounting is how you know which are which.
- infinite8s 10y ago
  That's an interesting way of thinking about it. Accounting is the programming equivalent to profiling (money flows in this case instead of time/memory flows).
edent 10y ago
> My regular expenses are significantly smaller than my income How do you know this? By what method do you account for your spending? > when I pop up into meeting them with a crappy old bicycle. How much do you spend on repairing your bike (either time or cash)? Does that work out as being more cost effective than buying a new bike / taking the bus / etc? If only there were a simple way to keep track of spending to see if it really were cost effective...