The “why” factor in personal finance management

    For more than ten years I have been engaged in the system of managing my own money and have developed for this my own, very effective system, which I gladly share with others. Quite often, I see that people begin to take into account their own finances, and after some time they give up this lesson, explaining that they lack motivation. Such cases upset me very much - because I sincerely believe that the 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 on the first page answer the question “how?”, Almost without stopping on the question “why?” Apparently, the answer to this question is implied. However, if the usefulness of financial management were so obvious, such as the usefulness of eating, or brushing your teeth, everyone would do it, and 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 sequentially asked five times, allowing us to move from a superficial answer to the deep meaning of an action.

    The basis of financial management, both personal and corporate, is a high-quality record of income-expenses. “High-quality” means that you need to accurately record each of your expenses (with incomes it is usually simpler), 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, we apply the 5Y method to it and ask “Why do you need to record all your expenses?” Let's go! Further narration for convenience I will lead in 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. Even 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 per month with much less effort. So I'm recording expenses for something else. Perhaps I do not just want to know how much I spend, but I want to know what exactly I spend it on. And I want the result at the end of the month to be predictable. Before I started recording expenses at the end of the month, it turned out all the time that I had no idea where part of the money went. It was easy to remember half of the expenses, another quarter - straining. The rest absolutely could not be explained and was drowned somewhere between the fourth glass of beer in the bar (and who paid there? I remember, there weren’t enough, they were dumped, how many were there ... I put two thousand ... maybe three) and small purchases (ten cups of coffee 200 rubles each is two thousand, by the way ...). As a result, at the end of the month there remains an unpleasant feeling: again the money went unclear where. In a desire to get rid of this feeling, I began to record expenses. I would like the financial result of the month to bepredictable and explainable .

    Let's go further. Why do we need a predictable and understandable result? This I know - so that this result can be controlled. I am an adult, I have financial goals: I want to save up for something (apartment, car, cottage, vacation - choose to your liking), plus I want to create a “airbag” for 3-4 salaries, so as not to be afraid of a dismissal , I want to invest in some business, in the end. If I know exactly how much and what I spend, 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 complicated. To begin with, is it really necessary to manage the financial result? Perhaps yes, although the conclusion is more intuitive than logical. And more precisely - for me personally, “yes”. Because it’s easier for me personally, I feel like control over my own life. Once again, we summarize: money is extremely important in life, so money management to a large extent contributes to life management in general. By the way, psychologists have proved that to a certain level of income, the level of happiness correlates with the level of income, so money management in a sense is also the management of your own happiness. If the money is a mess, or there is not enough money, we worry, worry, we are unhappy. If money is under control, we are calm, and from this - happier. Of course, I would not begin to equate the concepts of “money” and “happiness”, such a view is obviously too narrow, but financialCalmness is definitely a step towards happiness.

    Summing up the last argument, we covered as many as two “why?”. Why do you need to manage your own financial result? To find financial peace? And calm, in turn, is needed to be more happy. The answer to the question of why you need to be happier, I will probably leave you - I think everyone has his own.

    Let's restore the chain: record expenses => have an understandable and predictable financial result => be able to manage this result => find peace => move on to the path to happiness.

    Extremely good final result, agree? Recording expenses, it turned out, is not just a useful action, it is one of the tools on the path to peace and happiness.

    From this, by the way, one more funny conclusion follows: there are people who are able to not worry about money - I don’t know how they get it, this is such a natural anomaly. For them, achieving calm through money management is not required; they already have peace in this area . Apparently, they do not need financial management either.

    Continuation: Motives and goals in personal finance management

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