One of the things that Dave Ramsey often talks about in his Financial Peace University course is that there are two basic types of people. He calls them “nerds” and “free spirits”. Nerds are very detail oriented. They like numbers and spreadsheets. Budgets tend to come naturally to the nerd. Free spirits on the other hand are a little more apt to fly by the seat of their pants. They are a party waiting to happen. We’ll worry about the details later. In truth I think many of us, while we may lean more toward one end of the spectrum than the other, still have our nerd moments and our free spirit moments.
So while the “nerd” is the natural budgeter, I think there is one major risk that the nerd needs to be aware of.
The devil is in the details
If your personality is more geared to the details, you need to be careful that you don’t become so consumed with the details you fail to get anything done.
Too much analysis
Nerds love details. The problem is sometimes you can be so consumed with gathering information that you never get around to actually doing anything. It is important that you gather information. One of things that sometimes kills attempts at budgeting is either leaving things out or setting unrealistic amounts on various categories. The more information you gather the better chance you have of setting a realistic budget. Just be careful not to go so overboard collecting information that you never move out of the collecting phase and into the doing phase.
Too many categories
Another way nerds can sabotage their own budget is by having too many categories. You want enough categories so that you can manage your spending but take care not to break it into so many categories that it becomes unwieldy. Do you need to separate groceries into food, toiletries, medicines, and cleaning supplies or if you generally buy those items at the grocery store would it be better to just have a general groceries category? If you need to spend 20 minutes when you get home from the store going through the receipt to categorize each line item, you’ll give up on budgeting in a couple months.
Has to be perfect
Lastly, trying to be too perfect is a great way to torpedo your ability to budget. Of course you want to do your best to be accurate, but again don’t obsess over the details to the point that you never actually get started. There will always be one more tweak you can make. The 80/20 rule certainly applies here. It’s more important to get started than to have every number perfect.
Just Do It
To borrow a phrase from Nike, the best way to get started budgeting is to just do it. Every month will be a little different. If you have never budgeted before be aware that the first month will probably be a bit of a disaster. Regardless of how perfect you try to be, you’ll find items that you forgot. Some categories you will have over funded. Many others you probably underfunded because you didn’t realize how much you were spending in that area.
Don’t let that discourage you. Simply make adjustments and move on. The second month you’ll do better. And the third month you’ll do better still. Eventually, the budget will take little time and it will be very accurate as you come to learn your expenses.
If you are one of those detail oriented people that’s great. Just don’t become so obsessed with perfection that you never actually start.