Effective Budgeting Requires a Proper Perspective
Millions of Americans struggle with the basics of simply managing their cash flow and setting themselves up for success by living within their means. Of course, there are many reasons for this, but a potential factor is that people lack a proper perspective from which to view income and spending.
When Goldilocks was testing the three beds in the Bears’ house, one bed was “too soft”, one bed was “too hard” and one bed was “just right”. The three comfort levels in this fairytale correlate well with three different perspectives on budgeting and cash flow health awareness.
Too Soft: from 30,000 feet
When it comes to budgeting, some people take a broad “in the clouds” approach, categorizing their spending only into “wants and needs”, or maybe a 50-30-20 approach, and nothing more. This is great for some people, but some spending decisions inevitably demand a more detailed review. So, for most people, this perspective is “too soft”, with not enough detail for overall cash-flow awareness and proper budgeting, and not enough predictive foresight to make smarter spending decisions.
Too Hard: down in the jungle of details
Another approach to cash flow management involves getting “down in the jungle of details” - tracking every expense you make and categorizing them in a highly detailed budget or income report. This perspective is preferred by those who are extremely detail-oriented and appreciate LOTS of numbers, but for the majority who don’t, the specificity and minutia involved in this method can be overwhelming and discourage people from tracking their spending altogether. For them, this perspective is “too hard”, with a standard of attention and perfection too difficult for most busy people to maintain in their everyday life.
Just Right: A Treetop Level View That’s Easy to Follow
A more balanced perspective allows for looking at your budget “from the treetops”, comparing your “cash flow terrain” to that of the proven paths around you. This viewpoint is high enough to examine all major aspects of budgeting and cash flow health at once, while still being close enough to the ground to see the paths you should take to reach your financial goals. Just like Baby Bear’s bed in the story, this perspective is “just right” - not so detailed that users get bogged down in the minutia, but not so broad that needed actions are lost in the clouds.
For the large majority who appreciate an easily understood perspective, SPENDiD offers an easy-to-engage overview of personalized, peer-validated spending norms, and just the right amount of detail to make users want to come back to the platform offering this perspective over and over again on their journey to financial success.
