Sharing Daily Discoveries About Personal Finance And Business Topics

Budgeting And Spending Based Purely On Numbers Versus Reality

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Imagine you were a person given a task at a company to try and manage the budget for items such as food and entertainment expenses for the employees. There was this scenario I saw that was interesting which demonstrated to me how looking at things purely from a number perspective all the time isn’t the best choice. In this case the person did the basic math such as seeing how many people there were and then assigning a dollar value for each person. With that you multiply them together and that created the budget.

Here was a big issue too as in order to save money the mindset was to simply find different vendors that could supply something similar at a cheaper cost. Once hey fond that you could theoretically save hundreds even if it is only say one dollar per person and you had hundreds of people. In this case they did do it but the company actually ended up having to spend more overall. How did that happen you are probably asking right?

Apparently the vendors in question provided worst quality items to the point where employees weren’t as happy. That then resulted in employees being less happy and less productive which ultimately meant lower profits from the company. Taking care of people first would usually be the obvious thing to do of course. But I just felt this was such a great example on how when you are spending money there are times where just looking at the numbers isn’t good enough. That can relate to buying things that are more expensive too as you should always factor in if that item will ultimately save you time and stress overall.

People often say things like the marshmallow test for kids in terms of delayed gratification helps people to manage money better. I think examples like these also help you to be more analytic and educated about your spending to encourage you from getting better each day with it.

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